Plaintiff learned that, through the
FIRST DIVISION
[G.R. No. 122191. October 8, 1998]
SAUDI ARABIAN AIRLINES, petitioner, vs. COURT
OF APPEALS, MILAGROS P. MORADA and
HON. RODOLFO A. ORTIZ, in his capacity as
Presiding Judge of Branch 89, Regional
Trial Court of Quezon City, respondents.
DECISION
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of
the Rules of Court seeks to annul and set aside the
Resolution[1] dated September 27, 1995 and the
Decision[2] dated April 10, 1996 of the Court of
Appeals[3] in CA-G.R. SP No. 36533,[4] and the
Orders[5] dated August 29, 1994[6] and February 2,
1995[7] that were issued by the trial court in Civil Case
No. Q-93-18394.[8]
The pertinent antecedent facts which gave rise to
the instant petition, as stated in the questioned
Decision[9], are as follows:
On January 21, 1988 defendant SAUDIA
hired plaintiff as a Flight Attendant for its
airlines based in Jeddah, Saudi Arabia. x x x
On April 27, 1990, while on a lay-over in
Jakarta, Indonesia, plaintiff went to a disco
dance with fellow crew members Thamer Al-
Gazzawi and Allah Al-Gazzawi, both Saudi
nationals. Because it was almost morning
when they returned to their hotels, they
agreed to have breakfast together at the
room of Thamer. When they were in te (sic)
room, Allah left on some pretext. Shortly
after he did, Thamer attempted to rape
plaintiff. Fortunately, a roomboy and several
security personnel heard her cries for help
and rescued her. Later, the Indonesian police
came and arrested Thamer and Allah Al-
Gazzawi, the latter as an accomplice.
When plaintiff returned to Jeddah a few days
later, several SAUDIA officials interrogated
her about the Jakarta incident. They then
requested her to go back to Jakarta to help
arrange the release of Thamer and Allah. In
Jakarta, SAUDIA Legal Officer Sirah Akkad
and base manager Baharini negotiated with
the police for the immediate release of the
detained crew members but did not succeed
because plaintiff refused to cooperate. She
was afraid that she might be tricked into
something she did not want because of her
inability to understand the local dialect. She
also declined to sign a blank paper and a
document written in the local
dialect. Eventually, SAUDIA allowed plaintiff
to return to Jeddah but barred her from the
Jakarta flights.
intercession of the Saudi Arabian
government, the Indonesian authorities
agreed to deport Thamer and Allah after two
weeks of detention. Eventually, they were
again put in service by defendant SAUDI
(sic). In September 1990, defendant SAUDIA
transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff
thought that the Jakarta incident was already
behind her, her superiors requested her to
see Mr. Ali Meniewy, Chief Legal Officer of
SAUDIA, in Jeddah, Saudi Arabia.When she
saw him, he brought her to the police station
where the police took her passport and
questioned her about the Jakarta
incident.Miniewy simply stood by as the
police put pressure on her to make a
statement dropping the case against Thamer
and Allah. Not until she agreed to do so did
the police return her passport and allowed
her to catch the afternoon flight out of
Jeddah.
One year and a half later or on June 16, 1993,
in Riyadh, Saudi Arabia, a few minutes
before the departure of her flight to Manila,
plaintiff was not allowed to board the plane
and instead ordered to take a later flight to
Jeddah to see Mr. Miniewy, the Chief Legal
Officer of SAUDIA. When she did, a certain
Khalid of the SAUDIA office brought her to a
Saudi court where she was asked to sign a
document written in Arabic. They told her
that this was necessary to close the case
against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear
before the court on June 27, 1993. Plaintiff
then returned to Manila.
Shortly afterwards, defendant SAUDIA
summoned plaintiff to report to Jeddah once
again and see Miniewy on June 27, 1993 for
further investigation. Plaintiff did so after
receiving assurance from SAUDIAs Manila
manager, Aslam Saleemi, that the
investigation was routinary and that it posed
no danger to her.
In Jeddah, a SAUDIA legal officer brought
plaintiff to the same Saudi court on June 27,
1993. Nothing happened then but on June
28, 1993, a Saudi judge interrogated plaintiff
through an interpreter about the Jakarta
incident. After one hour of interrogation,
they let her go. At the airport, however, just
as her plane was about to take off, a SAUDIA
officer told her that the airline had forbidden
her to take flight. At the Inflight Service
Office where she was told to go, the
secretary of Mr. Yahya Saddick took away
her passport and told her to remain in
Jeddah, at the crew quarters, until further
orders.
On July 3, 1993 a SAUDIA legal officer again
escorted plaintiff to the same court where
the judge, to her astonishment and shock,
rendered a decision, translated to her in
English, sentencing her to five months
imprisonment and to 286 lashes. Only then
1
 did she realize that the Saudi court had tried
her, together with Thamer and Allah, for
what happened in Jakarta. The court found
plaintiff guilty of (1) adultery; (2) going to a
disco, dancing and listening to the music in
violation of Islamic laws; and (3) socializing
with the male crew, in contravention of
Islamic tradition.[10]
Facing conviction, private respondent sought the
help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any
assistance. She then asked the Philippine Embassy in
Jeddah to help her while her case is on
appeal. Meanwhile, to pay for her upkeep, she worked
on the domestic flight of SAUDIA, while Thamer and
Allah continued to serve in the international flights.[11]
Because she was wrongfully convicted, the Prince
of Makkah dismissed the case against her and allowed
her to leave Saudi Arabia. Shortly before her return to
Manila,[12] she was terminated from the service by
SAUDIA, without her being informed of the cause.
On November 23, 1993, Morada filed a
Complaint[13] for damages against SAUDIA, and Khaled
Al-Balawi (Al- Balawi), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus
Motion To Dismiss[14]which raised the following
grounds, to wit: (1) that the Complaint states no cause
of action against Saudia; (2) that defendant Al-Balawi
is not a real party in interest; (3) that the claim or
demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the
trial court has no jurisdiction to try the case.
On February 10, 1994, Morada filed her
Opposition (To Motion to Dismiss)[15] Saudia filed a
reply[16] thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended
Complaint[17] wherein Al-Balawi was dropped as party
defendant. On August 11, 1994, Saudia filed its
Manifestation and Motion to Dismiss Amended
Complaint[18].
The trial court issued an Order[19] dated August
29, 1994 denying the Motion to Dismiss Amended
Complaint filed by Saudia.
From the Order of respondent Judge[20] denying
the Motion to Dismiss, SAUDIA filed on September 20,
1994, its Motion for Reconsideration[21] of the Order
dated August 29, 1994. It alleged that the trial court
has no jurisdiction to hear and try the case on the
basis of Article 21 of the Civil Code, since the proper
law applicable is the law of the Kingdom of Saudi
Arabia. On October 14, 1994, Morada filed her
Opposition[22] (To Defendants Motion for
Reconsideration).
In the Reply[23] filed with the trial court on
October 24, 1994, SAUDIA alleged that since its Motion
for Reconsideration raised lack of jurisdiction as its
cause of action, the Omnibus Motion Rule does not
apply, even if that ground is raised for the first time on
appeal. Additionally, SAUDIA alleged that the
Philippines does not have any substantial interest in
the prosecution of the instant case, and hence, without
jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another
Order[24] dated February 2, 1995, denying SAUDIAs
Motion for Reconsideration. The pertinent portion of
the assailed Order reads as follows:
Acting on the Motion for Reconsideration of
defendant Saudi Arabian Airlines filed, thru
counsel, on September 20, 1994, and the
Opposition thereto of the plaintiff filed, thru
counsel, on October 14, 1994, as well as the
Reply therewith of defendant Saudi Arabian
Airlines filed, thru counsel, on October 24,
1994, considering that a perusal of the
plaintiffs Amended Complaint, which is one
for the recovery of actual, moral and
exemplary damages plus attorneys fees,
upon the basis of the applicable Philippine
law, Article 21 of the New Civil Code of the
Philippines, is, clearly, within the
jurisdiction of this Court as regards the
subject matter, and there being nothing
new of substance which might cause the
reversal or modification of the order sought
to be reconsidered, the motion for
reconsideration of the defendant, is
DENIED.
SO ORDERED.[25]
Consequently, on February 20, 1995, SAUDIA
filed its Petition for Certiorariand Prohibition with
Prayer for Issuance of Writ of Preliminary Injunction
and/or Temporary Restraining Order[26] with the
Court of Appeals.
Respondent Court of Appeals promulgated a
Resolution with Temporary Restraining
Order[27] dated February 23, 1995, prohibiting the
respondent Judge from further conducting any
proceeding, unless otherwise directed, in the interim.
In another Resolution[28] promulgated on
September 27, 1995, now assailed, the appellate court
denied SAUDIAs Petition for the Issuance of a Writ of
Preliminary Injunction dated February 18, 1995, to
wit:
The Petition for the Issuance of a Writ of
Preliminary Injunction is hereby DENIED,
after considering the Answer, with Prayer
to Deny Writ of Preliminary Injunction
(Rollo, p. 135) the Reply and Rejoinder, it
appearing that herein petitioner is not
clearly entitled thereto (Unciano
Paramedical College, et. Al., v. Court of
Appeals, et. Al., 100335, April 7, 1993,
Second Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this
Honorable Court the instant Petition[29] for Review
with Prayer for Temporary Restraining Order dated
October 13, 1995.
However, during the pendency of the instant
Petition, respondent Court of Appeals rendered the
Decision[30] dated April 10, 1996, now also assailed. It
ruled that the Philippines is an appropriate forum
considering that the Amended Complaints basis for
recovery of damages is Article 21 of the Civil Code, and
thus, clearly within the jurisdiction of respondent
Court. It further held that certiorari is not the proper
remedy in a denial of a Motion to Dismiss, inasmuch as
the petitioner should have proceeded to trial, and in
case of an adverse ruling, find recourse in an appeal.
2
 On May 7, 1996, SAUDIA filed its Supplemental
Petition for Review with Prayer for Temporary
Restraining Order[31] dated April 30, 1996, given due
course by this Court. After both parties submitted
their Memoranda,[32] the instant case is now deemed
submitted for decision.
Petitioner SAUDIA raised the following issues:
I Under the factual antecedents obtaining in this
The trial court has no jurisdiction to hear and try Civil
Case No. Q-93-18394 based on Article 21 of the New
Civil Code since the proper law applicable is the law of
the Kingdom of Saudi Arabia inasmuch as this case
involves what is known in private international law as
a conflicts problem. Otherwise, the Republic of the
Philippines will sit in judgment of the acts done by
another sovereign state which is abhorred.
II.
Leave of court before filing a supplemental pleading is
not a jurisdictional requirement. Besides, the matter
as to absence of leave of court is now moot and
academic when this Honorable Court required the
respondents to comment on petitioners April 30, 1996
Supplemental Petition For Review With Prayer For A
Temporary Restraining Order Within Ten (10) Days
From Notice Thereof.Further, the Revised Rules of
Court should be construed with liberality pursuant to
Section 2, Rule 1 thereof.
III.
Petitioner received on April 22, 1996 the April 10,
1996 decision in CA-G.R. SP NO. 36533 entitled Saudi
Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al. and filed
its April 30, 1996 Supplemental Petition For Review
With Prayer For A Temporary Restraining Order on
May 7, 1996 at 10:29 a.m. or within the 15-day
reglementary period as provided for under Section 1,
Rule 45 of the Revised Rules of Court. Therefore, the
decision in CA-G.R. SP NO. 36533 has not yet become
final and executory and this Honorable Court can take
cognizance of this case.[33]
From the foregoing factual and procedural
antecedents, the following issues emerge for our
resolution:
I.
WHETHER RESPONDENT APPELLATE
COURT ERRED IN HOLDING THAT THE
REGIONAL TRIAL COURT OF QUEZON CITY
HAS JURISDICTION TO HEAR AND TRY
CIVIL CASE NO. Q-93-18394 ENTITLED
MILAGROS P. MORADA V. SAUDI ARABIAN
AIRLINES.
II.
WHETHER RESPONDENT APPELLATE
COURT ERRED IN RULING THAT IN THE
CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a
conflict of laws that must be settled at the outset. It
maintains that private respondents claim for alleged
abuse of rights occurred in the Kingdom of Saudi
Arabia. It alleges that the existence of a foreign
element qualifies the instant case for the application of
the law of the Kingdom of Saudi Arabia, by virtue of
the lex loci delicti commissirule.[34]
On the other hand, private respondent contends
that since her Amended Complaint is based on Articles
19[35] and 21[36] of the Civil Code, then the instant case
is properly a matter of domestic law.[37]
case, there is no dispute that the interplay of events
occurred in two states, the Philippines and Saudi
Arabia.
As stated by private respondent in her Amended
Complaint[38] dated June 23, 1994:
2. Defendant SAUDI ARABIAN AIRLINES or
SAUDIA is a foreign airlines corporation
doing business in the Philippines. It may be
served with summons and other court
processes at Travel Wide Associated Sales
(Phils.), Inc., 3rd Floor, Cougar Building, 114
Valero St., Salcedo Village, Makati, Metro
Manila.
xxxxxxxxx
6. Plaintiff learned that, through the
intercession of the Saudi Arabian
government, the Indonesian authorities
agreed to deport Thamer and Allah after
two weeks of detention. Eventually, they
were again put in service by defendant
SAUDIA. In September 1990, defendant
SAUDIA transferred plaintiff to Manila.
7. On January 14, 1992, just when plaintiff
thought that the Jakarta incident was
already behind her, her superiors requested
her to see MR. Ali Meniewy, Chief Legal
Officer of SAUDIA, in Jeddah, Saudi
Arabia. When she saw him, he brought her
to the police station where the police took
her passport and questioned her about the
Jakarta incident. Miniewy simply stood by
as the police put pressure on her to make a
statement dropping the case against
Thamer and Allah. Not until she agreed to
do so did the police return her passport and
allowed her to catch the afternoon flight out
of Jeddah.
8. One year and a half later or on June 16,
1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight
to Manila, plaintiff was not allowed to board
the plane and instead ordered to take a
later flight to Jeddah to see Mr. Meniewy,
the Chief Legal Officer of SAUDIA. When she
did, a certain Khalid of the SAUDIA office
brought her to a Saudi court where she was
asked to sign a document written in
Arabic. They told her that this was
necessary to close the case against Thamer
and Allah. As it turned out, plaintiff signed a
notice to her to appear before the court on
June 27, 1993. Plaintiff then returned to
Manila.
9. Shortly afterwards, defendant SAUDIA
summoned plaintiff to report to Jeddah
once again and see Miniewy on June 27,
1993 for further investigation. Plaintiff did
3
 so after receiving assurance from SAUDIAs
Manila manager, Aslam Saleemi, that the
investigation was routinary and that it
posed no danger to her.
10. In Jeddah, a SAUDIA legal officer
brought plaintiff to the same Saudi court on
June 27, 1993. Nothing happened then but
on June 28, 1993, a Saudi judge
interrogated plaintiff through an
interpreter about the Jakarta incident. After
one hour of interrogation, they let her go. At
the airport, however, just as her plane was
about to take off, a SAUDIA officer told her
that the airline had forbidden her to take
that flight. At the Inflight Service Office
where she was told to go, the secretary of
Mr. Yahya Saddick took away her passport
and told her to remain in Jeddah, at the
crew quarters, until further orders.
11. On July 3, 1993 a SAUDIA legal officer
again escorted plaintiff to the same court
where the judge, to her astonishment and
shock, rendered a decision, translated to
her in English, sentencing her to five
months imprisonment and to 286
lashes. Only then did she realize that the
Saudi court had tried her, together with
Thamer and Allah, for what happened in
Jakarta. The court found plaintiff guilty of
(1) adultery; (2) going to a disco, dancing,
and listening to the music in violation of
Islamic laws; (3) socializing with the male
crew, in contravention of Islamic tradition.
12. Because SAUDIA refused to lend her a
hand in the case, plaintiff sought the help of
the Philippine Embassy in Jeddah. The
latter helped her pursue an appeal from the
decision of the court. To pay for her upkeep,
she worked on the domestic flights of
defendant SAUDIA while, ironically, Thamer
and Allah freely served the international
flights.[39]
Where the factual antecedents satisfactorily
establish the existence of a foreign element, we agree
with petitioner that the problem herein could present
a conflicts case.
A factual situation that cuts across territorial
lines and is affected by the diverse laws of two or more
states is said to contain a foreign element. The
presence of a foreign element is inevitable since social
and economic affairs of individuals and associations
are rarely confined to the geographic limits of their
birth or conception.[40]
The forms in which this foreign element may
appear are many.[41] The foreign element may simply
consist in the fact that one of the parties to a contract
is an alien or has a foreign domicile, or that a contract
between nationals of one State involves properties
situated in another State. In other cases, the foreign
element may assume a complex form.[42]
In the instant case, the foreign element consisted
in the fact that private respondent Morada is a
resident Philippine national, and that petitioner
SAUDIA is a resident foreign corporation. Also, by
virtue of the employment of Morada with the
petitioner Saudia as a flight stewardess, events did
transpire during her many occasions of travel across
national borders, particularly from Manila, Philippines
to Jeddah, Saudi Arabia, and vice versa, that caused a
conflicts situation to arise.
We thus find private respondents assertion that
the case is purely domestic,
imprecise. A conflicts problem presents itself here, and
the question of jurisdiction[43] confronts the court a
quo.
After a careful study of the private respondents
Amended Complaint,[44] and the Comment thereon, we
note that she aptly predicated her cause of action on
Articles 19 and 21 of the New Civil Code.
On one hand, Article 19 of the New Civil Code
provides;
Art. 19. Every person must, in the exercise
of his rights and in the performance of his
duties, act with justice give everyone his
due and observe honesty and good faith.
On the other hand, Article 21 of the New Civil
Code provides:
Art. 21. Any person who willfully causes
loss or injury to another in a manner that is
contrary to morals, good customs or public
policy shall compensate the latter for
damages.
Thus, in Philippine National Bank (PNB) vs. Court
of Appeals,[45] this Court held that:
The aforecited provisions on human
relations were intended to expand the
concept of torts in this jurisdiction by
granting adequate legal remedy for the
untold number of moral wrongs which is
impossible for human foresight to
specifically provide in the statutes.
Although Article 19 merely declares a principle of
law, Article 21 gives flesh to its provisions. Thus, we
agree with private respondents assertion that
violations of Articles 19 and 21 are actionable, with
judicially enforceable remedies in the municipal
forum.
Based on the allegations[46] in the Amended
Complaint, read in the light of the Rules of Court on
jurisdiction[47] we find that the Regional Trial Court
(RTC) of Quezon City possesses jurisdiction over the
subject matter of the suit.[48] Its authority to try and
hear the case is provided for under Section 1 of
Republic Act No. 7691, to wit:
Section 1. Section 19 of Batas Pambansa
Blg. 129, otherwise known as the Judiciary
Reorganization Act of 1980, is hereby
amended to read as follows:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial
Courts shall exercise exclusive jurisdiction:
xxxxxxxxx
(8) In all other cases in which demand, exclusive of
interest, damages of whatever kind, attorneys fees,
litigation expenses, and costs or the value of the
property in controversy exceeds One hundred
thousand pesos (P100,000.00) or, in such other cases
4
in Metro Manila, where the demand, exclusive of the
above-mentioned items exceeds Two hundred
Thousand pesos (P200,000.00).(Emphasis ours)
xxxxxxxxx
And following Section 2 (b), Rule 4 of the Revised
Rules of Courtthe venue, Quezon City, is appropriate:
SEC. 2 Venue in Courts of First Instance. [Now
Regional Trial Court]
(a) x x x x x x x x x
(b) Personal actions. All other actions may
be commenced and tried where the
defendant or any of the defendants resides
or may be found, or where the plaintiff or
any of the plaintiff resides, at the election of
the plaintiff.
Pragmatic considerations, including the
convenience of the parties, also weigh heavily in favor
of the RTC Quezon City assuming
jurisdiction.Paramount is the private interest of the
litigant. Enforceability of a judgment if one is obtained
is quite obvious. Relative advantages and obstacles to
a fair trial are equally important. Plaintiff may not, by
choice of an inconvenient forum, vex, harass, or
oppress the defendant, e.g. by inflicting upon him
needless expense or disturbance. But unless the
balance is strongly in favor of the defendant, the
plaintiffs choice of forum should rarely be
disturbed.[49]
Weighing the relative claims of the parties, the
court a quo found it best to hear the case in the
Philippines. Had it refused to take cognizance of the
case, it would be forcing plaintiff (private respondent
now) to seek remedial action elsewhere, i.e. in the
Kingdom of Saudi Arabia where she no longer
maintains substantial connections. That would have
caused a fundamental unfairness to her.
Moreover, by hearing the case in the Philippines
no unnecessary difficulties and inconvenience have
been shown by either of the parties. The choice of
forum of the plaintiff (now private respondent) should
be upheld.
Similarly, the trial court also possesses
jurisdiction over the persons of the parties herein. By
filing her Complaint and Amended Complaint with the
trial court, private respondent has voluntary
submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has
filed several motions[50]praying for the dismissal of
Moradas Amended Complaint. SAUDIA also filed an
Answer In Ex Abundante Cautelam dated February 20,
1995. What is very patent and explicit from the
motions filed, is that SAUDIA prayed for other reliefs
under the premises. Undeniably, petitioner SAUDIA
has effectively submitted to the trial courts
jurisdiction by praying for the dismissal of the
Amended Complaint on grounds other than lack of
jurisdiction.
As held by this Court in Republic vs. Ker and
Company, Ltd.:[51]
We observe that the motion to dismiss filed
on April 14, 1962, aside from disputing the
lower courts jurisdiction over defendants
person, prayed for dismissal of the
complaint on the ground that plaintiffs
cause of action has prescribed. By
interposing such second ground in its
motion to dismiss, Ker and Co., Ltd. availed
of an affirmative defense on the basis of
which it prayed the court to resolve
controversy in its favor. For the court to
validly decide the said plea of defendant
Ker & Co., Ltd., it necessarily had to acquire
jurisdiction upon the latters person, who,
being the proponent of the affirmative
defense, should be deemed to have
abandoned its special appearance and
voluntarily submitted itself to the
jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held
that:
When the appearance is by motion for the
purpose of objecting to the jurisdiction of
the court over the person, it must be for the
sole and separate purpose of objecting to
the jurisdiction of the court. If his motion is
for any other purpose than to object to the
jurisdiction of the court over his person, he
thereby submits himself to the jurisdiction
of the court. A special appearance by
motion made for the purpose of objecting to
the jurisdiction of the court over the person
will be held to be a general appearance, if
the party in said motion should, for
example, ask for a dismissal of the action
upon the further ground that the court had
no jurisdiction over the subject matter.[52]
Clearly, petitioner had submitted to the
jurisdiction of the Regional Trial Court of Quezon
City. Thus, we find that the trial court has jurisdiction
over the case and that its exercise thereof, justified.
As to the choice of applicable law, we note that
choice-of-law problems seek to answer two important
questions: (1) What legal system should control a
given situation where some of the significant facts
occurred in two or more states; and (2) to what extent
should the chosen legal system regulate the
situation.[53]
Several theories have been propounded in order
to identify the legal system that should ultimately
control. Although ideally, all choice-of-law theories
should intrinsically advance both notions of justice
and predictability, they do not always do so. The
forum is then faced with the problem of deciding
which of these two important values should be
stressed.[54]
Before a choice can be made, it is necessary for us
to determine under what category a certain set of facts
or rules fall. This process is known as characterization,
or the doctrine of qualification. It is the process of
deciding whether or not the facts relate to the kind of
question specified in a conflicts rule.[55] The purpose
of characterization is to enable the forum to select the
proper law.[56]
Our starting point of analysis here is not a legal
relation, but a factual situation, event, or operative
fact.[57] An essential element of conflict rules is the
indication of a test or connecting factor or point of
5
contact. Choice-of-law rules invariably consist of a
factual relationship (such as property right, contract
claim) and a connecting factor or point of contact, such
as the situs of the res, the place of celebration, the
place of performance, or the place of wrongdoing.[58]
Note that one or more circumstances may be
present to serve as the possible test for the
determination of the applicable law.[59] These test
factors or points of contact or connecting factors could
be any of the following:
(1) The nationality of a person, his domicile,
his residence, his place of sojourn, or his
origin;
(2) the seat of a legal or juridical person,
such as a corporation;
(3) the situs of a thing, that is, the place
where a thing is, or is deemed to be
situated. In particular, the lex situs is
decisive when real rights are involved;
(4) the place where an act has been done,
the locus actus, such as the place where a
contract has been made, a marriage
celebrated, a will signed or a tort
committed. The lex loci actus is
particularly important in contracts and
torts;
(5) the place where an act is intended to
come into effect, e.g., the place of
performance of contractual duties, or the
place where a power of attorney is to be
exercised;
(6) the intention of the contracting parties
as to the law that should govern their
agreement, the lex loci intentionis;
(7) the place where judicial or
administrative proceedings are instituted
or done. The lex forithe law of the forumis
particularly important because, as we have
seen earlier, matters of procedure not going
to the substance of the claim involved are
governed by it; and because the lex
fori applies whenever the content of the
otherwise applicable foreign law is
excluded from application in a given case
for the reason that it falls under one of the
exceptions to the applications of foreign
law; and
(8) the flag of a ship, which in many cases is
decisive of practically all legal relationships
of the ship and of its master or owner as
such. It also covers contractual
relationships particularly contracts of
affreightment.[60] (Underscoring ours.)
After a careful study of the pleadings on record,
including allegations in the Amended Complaint
deemed submitted for purposes of the motion to
dismiss, we are convinced that there is reasonable
basis for private respondents assertion that although
she was already working in Manila, petitioner brought
her to Jeddah on the pretense that she would merely
testify in an investigation of the charges she made
against the two SAUDIA crew members for the attack
on her person while they were in Jakarta. As it turned
out, she was the one made to face trial for very serious
charges, including adultery and violation of Islamic
laws and tradition.
There is likewise logical basis on record for the
claim that the handing over or turning over of the
person of private respondent to Jeddah officials,
petitioner may have acted beyond its duties as
employer. Petitioners purported act contributed to
and amplified or even proximately caused additional
humiliation, misery and suffering of private
respondent. Petitioner thereby allegedly facilitated the
arrest, detention and prosecution of private
respondent under the guise of petitioners authority as
employer, taking advantage of the trust, confidence
and faith she reposed upon it. As purportedly found by
the Prince of Makkah, the alleged conviction and
imprisonment of private respondent was
wrongful. But these capped the injury or harm
allegedly inflicted upon her person and reputation, for
which petitioner could be liable as claimed, to provide
compensation or redress for the wrongs done, once
duly proven.
Considering that the complaint in the
court a quo is one involving torts, the connecting
factor or point of contact could be the place or places
where the tortious conduct or lex loci
actus occurred. And applying the torts principle in a
conflicts case, we find that the Philippines could be
said as a situs of the tort (the place where the alleged
tortious conduct took place). This is because it is in the
Philippines where petitioner allegedly deceived
private respondent, a Filipina residing and working
here. According to her, she had honestly believed that
petitioner would, in the exercise of its rights and in the
performance of its duties, act with justice, give her her
due and observe honesty and good faith.Instead,
petitioner failed to protect her, she claimed. That
certain acts or parts of the injury allegedly occurred in
another country is of no moment. For in our view what
is important here is the place where the over-all harm
or the fatality of the alleged injury to the person,
reputation, social standing and human rights of
complainant, had lodged, according to the plaintiff
below (herein private respondent). All told, it is not
without basis to identify the Philippines as the situsof
the alleged tort.
Moreover, with the widespread criticism of the
traditional rule of lex loci delicti commissi, modern
theories and rules on tort liability[61] have been
advanced to offer fresh judicial approaches to arrive at
just results. In keeping abreast with the modern
theories on tort liability, we find here an occasion to
apply the State of the most significant relationship
rule, which in our view should be appropriate to apply
now, given the factual context of this case.
In applying said principle to determine the State
which has the most significant relationship, the
following contacts are to be taken into account and
evaluated according to their relative importance with
respect to the particular issue: (a) the place where the
injury occurred; (b) the place where the conduct
causing the injury occurred; (c) the domicile,
residence, nationality, place of incorporation and place
of business of the parties, and (d) the place where the
relationship, if any, between the parties is centered.[62]
As already discussed, there is basis for the claim
that over-all injury occurred and lodged in the
Philippines. There is likewise no question that private
6
respondent is a resident Filipina national, working [2] Annex A, SUPPLEMENTAL PETITION, April 30,
with petitioner, a resident foreign corporation 1996, rollo, pp. 88-102.
engaged here in the business of international air [3] Penned by Associate Justice Bernardo Ll. Salas, and

carriage. Thus, the relationship between the parties concurred in by Associate Justice Jorge S. Imperial and
was centered here, although it should be stressed that Associate Justice Pacita Caizares-Nye.
this suit is not based on mere labor law [4] Entitled Saudi Arabian Airlines vs. Hon. Judge

violations. From the record, the claim that the Rodolfo A. Ortiz, in his capacity as Presiding Judge of
Philippines has the most significant contact with the Branch 89 of the Regional Trial Court of Quezon City
matter in this dispute,[63] raised by private respondent and Milagros P. Morada.
as plaintiff below against defendant (herein [5] Issued by respondent Judge Hon. Rodolfo A. Ortiz of

petitioner), in our view, has been properly established. Branch 89, Regional Trial Court of Quezon City.
[6] Annex B, PETITION, October 13, 1995, rollo, pp. 37-
Prescinding from this premise that the 39.
Philippines is the situs of the tort complaint of and the [7] Annex B, PETITION, October 13, 1995, rollo, p. 40.
place having the most interest in the problem, we find, [8] Entitled Milagros P. Morada vs. Saudi Arabian
by way of recapitulation, that the Philippine law on Airlines.
tort liability should have paramount application to and [9] Supra, note 2.
control in the resolution of the legal issues arising out [10] Decision, pp. 2-4; See Rollo, pp. 89-91.
of this case. Further, we hold that the respondent [11] Private respondent's Comment; rollo, p. 50.
Regional Trial Court has jurisdiction over the parties [12] Ibid., at pp. 50-51.
and the subject matter of the complaint; the [13] Dated November 19, 1993 and docketed as Civil
appropriate venue is in Quezon City, which could Case No. Q-93-18394, Branch 89, Regional Trial Court
properly apply Philippine law.Moreover, we find of Quezon City.
untenable petitioners insistence that [s]ince private [14] Dated January 14, 1994.
respondent instituted this suit, she has the burden of [15] Dated February 4, 1994.
pleading and proving the applicable Saudi law on the [16] Reply dated March 1, 1994.
matter.[64] As aptly said by private respondent, she has [17] Records, pp. 65-84.
no obligation to plead and prove the law of the [18] Rollo, p. 65.
Kingdom of Saudi Arabia since her cause of action is [19] Supra, note 6.
based on Articles 19 and 21 of the Civil Code of the [20] Hon. Rodolfo A. Ortiz.
Philippines. In her Amended Complaint and [21] Dated September 19, 1994.
subsequent pleadings she never alleged that Saudi law [22] Records, pp. 108-116.
should govern this case.[65] And as correctly held by [23] Records, pp. 117-128.
the respondent appellate court, considering that it was [24] Supra, note 7.
the petitioner who was invoking the applicability of [25] Ibid.
the law of Saudi Arabia, thus the burden was on it [26] Dated February 18, 1995; see supra note 4.
[petitioner] to plead and to establish what the law of [27] Supra, note 7.
Saudi Arabia is.[66] [28] Records, p. 180.
[29] Rollo, pp. 1-44.
Lastly, no error could be imputed to the
[30] Supra, note 2.
respondent appellate court in upholding the trial
[31] Rollo, pp. 80-86.
courts denial of defendants (herein petitioners)
[32] Memorandum for Petitioner dated October 9,
motion to dismiss the case. Not only was jurisdiction
in order and venue properly laid, but appeal after trial 1996; rollo, pp. 149-180; and Memorandum for
was obviously available, and the expeditious trial itself Private Respondent, 30 October 1996, rollo, pp. 182-
indicated by the nature of the case at 210.
[33] Rollo, pp. 157-159. All caps in the original.
hand. Indubitably, the Philippines is the state
[34] Memorandum for Petitioner, p. 14, rollo, p. 162;.
intimately concerned with the ultimate outcome of the
[35] Art. 19. Every person must, in the exercise of his
case below not just for the benefit of all the litigants,
but also for the vindication of the countrys system of rights and in the performance of his duties, act with
law and justice in a transnational setting. With these justice, give everyone his due, and observe honesty
guidelines in mind, the trial court must proceed to try and good faith.
[36] Art. 21. Any person who wilfully causes loss or
and adjudge the case in the light of relevant Philippine
law, with due consideration of the foreign element or injury to another in a manner that is contrary to
elements involved. Nothing said herein, of course, morals, good customs or public policy shall
should be construed as prejudging the results of the compensate the latter for the damages.
[37] Memorandum for Private Respondent, p. 9, rollo, p.
case in any manner whatsoever.
190.
WHEREFORE, the instant petition for certiorari [38] Records, pp. 65-71.
is hereby DISMISSED. Civil Case No. Q-93-18394 [39] Supra, note 17, at pp. 65-68.
entitled Milagros P. Morada vs. Saudi Arabia Airlines is [40] Salonga, Private International Law, 1995 edition, p.
hereby REMANDED to Regional Trial Court of Quezon 3.
City, Branch 89 for further proceedings. [41] Ibid., citing Cheshire and North, Private
International Law, p. 5 by P.M. North and J.J. Faucett
SO ORDERED.
(Butterworths; London, 1992).
[42] Ibid.
Davide, Jr., (Chairman), Bellosillo,
[43] Paras, Philippine Conflict of Laws, sixth edition
Vitug, and Panganiban, JJ., concur.
(1984), p. 24, citing Leflar, The Law of Conflict of
Laws, pp. 5-6.
[44] Supra, note 17.
[45] 83 SCRA 237, 247.
[1] Annex A, PETITION, October 13, 1995, rollo, p. 36.

7
[46] Supra, note at 17, at p. 6. Morada prays that Respondent.
judgment be rendered against Saudia, ordering it to No
pay: (1) not less than P250,000.00 as actual damages;
(2) P4 million in moral damages; (3) P500,000.00 in x--------------------------------------------------------------------------
exemplary damages; and (4) P500,000.00 in attorneys ----------x
fees.
[47] Baguioro v. Barrios, 77 Phil. 120.
[48] Jurisdiction over the subject matter is conferred by DECISION
law and is defined as the authority of a court to hear
and decide cases of the general class to which the NACHURA, J.:
proceedings in question belong. (Reyes v. Diaz, 73 Phil.
484,487)
[49] Supra, note 37, p. 58, citing Gulf Oil
Corporation v. Gilbert, 350 U.S. 501, 67 Sup. Ct. 839
(1947).
[50] Omnibus Motion to Dismiss dated January 14,

1994; Reply (to Plaintiffs Opposition) dated February

19, 1994; Comment (to Plaintiffs Motion to Admit Before the Court is a petition for review
Amended Complaint dated June 23, 1994) dated July on certiorari under Rule 45 of the Rules of Court
20, 1994; Manifestation and Motion to Dismiss
Amended Complaint dated June 23, 1994 under date assailing the April 18, 2001 Decision[1] of the Court of
August 11, 1994; and Motion for Reconsideration Appeals (CA) in CA-G.R. SP No. 60827, and the July 25,
dated September 19, 1994.
[51] 18 SCRA 207, 213-214. 2001 Resolution[2] denying the motion for
[52] 64 SCRA 23, 31.
reconsideration thereof.
[53] Coquia and Pangalangan, Conflict of Laws, 1995

edition, p. 65, citing Von Mehren, Recent Trends in

Choice-of-Law Methodology, 60 Cornell L. Rev. 927
On March 30, 1999, petitioner Nippon Engineering
(1975).
[54] Ibid. Consultants Co., Ltd. (Nippon), a Japanese consultancy
[55] Supra, note 40 at p. 94, citing Falconbridge, Essays
firm providing technical and management support in
on the Conflict of Laws, p. 50.
[56] Ibid. the infrastructure projects of foreign
[57] Supra, note 37, at p. 136; cf. Mussbaum, Principle of
governments,[3] entered into an Independent
Private International Law, p. 173; and Rabel, The
Conflict of Laws: A Comparative Study, pp. 51-52. Contractor Agreement (ICA) with respondent Minoru
[58] Supra, note 37, at p. 137.
[59] Ibid. Kitamura, a Japanese national permanently residing in
[60] Supra, note 37, at pp. 138-139.
the Philippines.[4] The agreement provides that
[61] Includes the (1) German rule of elective
concurrence; (2) State of the most significant respondent was to extend professional services
relationship rule (the Second Restatement of 1969); to Nippon for a year starting on April 1,
(3) State interest analysis; and (4) Cavers Principle of
Preference. 1999.[5]Nippon then assigned respondent to work as
[62] Supra, note 37, p. 396.
the project manager of the Southern Tagalog Access
[63] Supra, note 59, at p. 79, citing Ruben v. Irving Trust

Co., 305 N.Y. 288, 305, 113 N.E. 2d424, 431. Road (STAR) Project in the Philippines, following the
[64] Memorandum for Petitioner, p. 22; Rollo, p. 170.
[65] Memorandum for Private Respondent, pp. 21-
company's consultancy contract with the Philippine
22; rollo, pp. 202-203. Government.[6]
[66] CA Decision, p. 10; rollo, p. 97.

When the STAR Project was near completion, the

Department of Public Works and Highways (DPWH)
engaged the consultancy services of Nippon,
THIRD DIVISION
on January 28, 2000, this time for the detailed
KAZUHIRO HASEGAWA and NIPPON ENGINEERING engineering
G.R. and construction supervision of the
No. 149177
CONSULTANTS CO., LTD., Bongabon-Baler Road Improvement (BBRI)
Petitioners, Present:
Project.[7] Respondent was named as the project
YNARES-SANTIAGO, J.,
manager in the contract's Appendix 3.1.[8]
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
On February 28, 2000, petitioner Kazuhiro
NACHURA, and
REYES, JJ.
Hasegawa, Nippon's general manager for its

MINORU KITAMURA, International Division, informed respondent that the

Promulgated:

8
company had no more intention of automatically verification and certification against forum
renewing his ICA. His services would be engaged by shopping.[19] An Entry of Judgment was later issued by
the company only up to the substantial completion of the appellate court on September 20, 2000.[20]
the STAR Project on March 31, 2000, just in time for
the ICA's expiry.[9] Aggrieved by this development, petitioners filed with
the CA, on September 19, 2000, still within the
Threatened with impending unemployment, reglementary period, a second Petition
respondent, through his lawyer, requested a for Certiorari under Rule 65 already stating therein the
negotiation conference and demanded that he be material dates and attaching thereto the proper
assigned to the BBRI project. Nippon insisted that verification and certification. This second petition,
respondents contract was for a fixed term that had which substantially raised the same issues as those in
already expired, and refused to negotiate for the the first, was docketed as CA-G.R. SP No. 60827.[21]
renewal of the ICA.[10]
Ruling on the merits of the second petition, the
As he was not able to generate a positive response appellate court rendered the assailed April 18,
from the petitioners, respondent consequently 2001 Decision[22] finding no grave abuse of discretion
initiated on June 1, 2000 Civil Case No. 00-0264 for in the trial court's denial of the motion to dismiss. The
specific performance and damages with CA ruled, among others, that the principle of lex loci
the Regional Trial Court ofLipa City.[11] celebrationis was not applicable to the case, because
nowhere in the pleadings was the validity of the
For their part, petitioners, contending that the ICA had written agreement put in issue. The CA thus declared
been perfected in Japan and executed by and between that the trial court was correct in applying instead the
Japanese nationals, moved to dismiss the complaint principle of lex loci solutionis.[23]
for lack of jurisdiction. They asserted that the claim for
improper pre-termination of respondent's ICA could Petitioners' motion for reconsideration was
only be heard and ventilated in the proper courts subsequently denied by the CA in the assailed July 25,
of Japan following the principles of lex loci 2001 Resolution.[24]
celebrationis and lex contractus.[12]
Remaining steadfast in their stance despite the series
In the meantime, on June 20, 2000, the DPWH of denials, petitioners instituted the instant Petition
approved Nippon's request for the replacement of for Review on Certiorari[25] imputing the following
Kitamura by a certain Y. Kotake as project manager of errors to the appellate court:
the BBRI Project.[13]
A. THE HONORABLE COURT OF
APPEALS GRAVELY ERRED IN
On June 29, 2000, the RTC, invoking our ruling FINDING THAT THE TRIAL COURT
VALIDLY EXERCISED JURISDICTION
in Insular Government v. Frank[14] that matters OVER THE INSTANT CONTROVERSY,
connected with the performance of contracts are DESPITE THE FACT THAT THE
CONTRACT SUBJECT MATTER OF
regulated by the law prevailing at the place of THE PROCEEDINGS A QUO WAS
performance,[15] denied the motion to dismiss.[16] The ENTERED INTO BY AND BETWEEN
TWO JAPANESE NATIONALS,
trial court subsequently denied petitioners' motion for WRITTEN WHOLLY IN THE
reconsideration,[17] prompting them to file with the JAPANESE LANGUAGE AND
EXECUTED IN TOKYO, JAPAN.
appellate court, on August 14, 2000, their first Petition
for Certiorari under Rule 65 [docketed as CA-G.R. SP B. THE HONORABLE COURT OF
APPEALS GRAVELY ERRED IN
No. 60205].[18] On August 23, 2000, the CA resolved to OVERLOOKING THE NEED TO
REVIEW OUR ADHERENCE TO THE
dismiss the petition on procedural groundsfor lack of
PRINCIPLE OF LEX LOCI
statement of material dates and for insufficient

9
 SOLUTIONIS IN THE LIGHT OF
RECENT DEVELOPMENT[S] IN
PRIVATE INTERNATIONAL LAWS.[26]
The pivotal question that this Court is called upon to
resolve is whether the subject matter jurisdiction of
Philippine courts in civil cases for specific
performance and damages involving contracts
executed outside the country by foreign nationals may
be assailed on the principles of lex
celebrationis, lex contractus, the state of the most
significant relationship rule, or forum non conveniens.
However, before ruling on this issue, we must first
dispose of the procedural matters raised by the
respondent.
Kitamura contends that the finality of the appellate
court's decision in CA-G.R. SP No. 60205 has already
barred the filing of the second petition docketed as CA-
G.R. SP No. 60827 (fundamentally raising the same
issues as those in the first one) and the instant petition
for review thereof.
We do not agree. When the CA dismissed CA-G.R. SP
No. 60205 on account of the petition's defective
certification of non-forum shopping, it was a dismissal
without prejudice.[27] The same holds true in the CA's
dismissal of the said case due to defects in the formal
requirement of verification[28] and in the other
requirement in Rule 46 of the Rules of Court on the
statement of the material dates.[29] The dismissal being
without prejudice, petitioners can re-file the petition,
or file a second petition attaching thereto the
appropriate verification and certificationas they, in
fact didand stating therein the material dates, within
the prescribed period[30] in Section 4, Rule 65 of the
said Rules.[31]
The dismissal of a case without prejudice signifies the
absence of a decision on the merits and leaves the
parties free to litigate the matter in a subsequent
action as though the dismissed action had not been
commenced. In other words, the termination of a case
not on the merits does not bar another action
involving the same parties, on the same subject matter
and theory.[32]
Necessarily, because the said dismissal is without
prejudice and has no res judicata effect, and even if
petitioners still indicated in the verification and
certification of the second certiorari petition that the
first had already been dismissed on procedural
loci
grounds,[33] petitioners are no longer required by the
Rules to indicate in their certification of non-forum
shopping in the instant petition for review of the second
certiorari petition, the status of the aforesaid first
petition before the CA. In any case, an omission in the
certificate of non-forum shopping about any event that
will not constitute res judicata and litis pendentia, as in
the present case, is not a fatal defect.It will not warrant
the dismissal and nullification of the entire
proceedings, considering that the evils sought to be
prevented by the said certificate are no longer
present.[34]
The Court also finds no merit in respondent's
contention that petitioner Hasegawa is only
authorized to verify and certify, on behalf of Nippon,
the certiorari petition filed with the CA and not the
instant petition. True, the Authorization[35] dated
September 4, 2000, which is attached to the
second certiorari petition and which is also attached to
the instant petition for review, is limited in scopeits
wordings indicate that Hasegawa is given the
authority to sign for and act on behalf of the company
only in the petition filed with the appellate court, and
that authority cannot extend to the instant petition for
review.[36] In a plethora of cases, however, this Court
has liberally applied the Rules or even suspended its
application whenever a satisfactory explanation and a
subsequent fulfillment of the requirements have been
made.[37] Given that petitioners herein sufficiently
explained their misgivings on this point and appended
10
to their Reply[38] an updated Authorization[39] for entire case by appeal in due course.[44] While there are

Hasegawa to act on behalf of the company in the recognized exceptions to this rule,[45] petitioners' case

instant petition, the Court finds the same as sufficient does not fall among them.

compliance with the Rules.

This brings us to the discussion of the substantive

However, the Court cannot extend the same liberal issue of the case.

treatment to the defect in the verification and

certification. As respondent pointed out, and to which Asserting that the RTC of Lipa City is an inconvenient

we agree, Hasegawa is truly not authorized to act on forum, petitioners question its jurisdiction to hear and

behalf of Nippon in this case. The aforesaid September resolve the civil case for specific performance and

4, 2000 Authorization and even the subsequent August damages filed by the respondent. The ICA subject of

17, 2001 Authorization were issued only by Nippon's the litigation was entered into and perfected

president and chief executive officer, not by the in Tokyo, Japan, by Japanese nationals, and written

company's board of directors. In not a few cases, we wholly in the Japanese language. Thus, petitioners

have ruled that corporate powers are exercised by the posit that local courts have no substantial relationship

board of directors; thus, no person, not even its to the parties[46]following the [state of the] most

officers, can bind the corporation, in the absence of significant relationship rule in Private International

authority from the board.[40]Considering that Law.[47]

Hasegawa verified and certified the petition only on

his behalf and not on behalf of the other petitioner, the The Court notes that petitioners adopted an additional

petition has to be denied pursuant to Loquias v. Office but different theory when they elevated the case to the

of the Ombudsman.[41] Substantial compliance will not appellate court. In the Motion to Dismiss[48] filed with

suffice in a matter that demands strict observance of the trial court, petitioners never contended that the

the Rules.[42] While technical rules of procedure are RTC is an inconvenient forum. They merely argued

designed not to frustrate the ends of justice, that the applicable law which will determine the

nonetheless, they are intended to effect the proper and validity or invalidity of respondent's claim is that

orderly disposition of cases and effectively prevent the of Japan, following the principles of lex loci

clogging of court dockets.[43] celebrationis and lex contractus.[49] While not

abandoning this stance in their petition before the

Further, the Court has observed that petitioners appellate court, petitioners on certiorari significantly

incorrectly filed a Rule 65 petition to question the trial invoked the defense of forum non conveniens.[50] On

court's denial of their motion to dismiss. It is a well- petition for review before this Court, petitioners

established rule that an order denying dropped their other arguments, maintained the forum

a motion to dismiss is interlocutory, non conveniens defense, and introduced their new

and cannot be the subject of the extraordinary petition argument that the applicable principle is the [state of

for certiorari or mandamus. The appropriate recourse the] most significant relationship rule.[51]

is to file an answer and to interpose as defenses the

objections raised in the motion, to proceed to trial, Be that as it may, this Court is not inclined to deny this

and, in case of an adverse decision, to elevate the petition merely on the basis of the change in theory, as

11
explained in Philippine Ports Authority v. City of herein, petitioners are actually referring to subject

Iloilo.[52] We only pointed out petitioners' inconstancy matter jurisdiction.

in their arguments to emphasize their incorrect

assertion of conflict of laws principles. Jurisdiction over the subject matter in a judicial

proceeding is conferred by the sovereign authority

To elucidate, in the judicial resolution of conflicts which establishes and organizes the court. It is given

problems, three consecutive phases are involved: only by law and in the manner prescribed by law.[58] It

jurisdiction, choice of law, and recognition and is further determined by the allegations of the

enforcement of judgments. Corresponding to these complaint irrespective of whether the plaintiff is

phases are the following questions: (1) Where can or entitled to all or some of the claims asserted

should litigation be initiated? (2) Which law will the therein.[59] To succeed in its motion for the dismissal of

court apply? and (3) Where can the resulting judgment an action for lack of jurisdiction over the subject

be enforced?[53] matter of the claim,[60] the movant must show that the

court or tribunal cannot act on the matter submitted

Analytically, jurisdiction and choice of law are two to it because no law grants it the power to adjudicate

distinct concepts.[54]Jurisdiction considers whether it the claims.[61]

is fair to cause a defendant to travel to this state;

choice of law asks the further question whether the In the instant case, petitioners, in their motion to

application of a substantive law which will determine dismiss, do not claim that the trial court is not

the merits of the case is fair to both parties. The power properly vested by law with jurisdiction to hear the

to exercise jurisdiction does not automatically give a subject controversy for, indeed, Civil Case No. 00-0264

state constitutional authority to apply forum law. for specific performance and damages is one not

While jurisdiction and the choice of the lex fori will capable of pecuniary estimation and is properly

often coincide, the minimum contacts for one do not cognizable by the RTC of Lipa City.[62] What they rather

always provide the necessary significant contacts for raise as grounds to question subject matter

the other.[55] The question of whether the law of a state jurisdiction are the principles of lex loci

can be applied to a transaction is different from the celebrationis and lex contractus, and the state of the

question of whether the courts of that state have most significant relationship rule.

jurisdiction to enter a judgment.[56]

The Court finds the invocation of these grounds

In this case, only the first phase is at issuejurisdiction. unsound.

Jurisdiction, however, has various aspects. For a court Lex loci celebrationis relates to the law of the place of

to validly exercise its power to adjudicate a the ceremony[63] or the law of the place where a

controversy, it must have jurisdiction over the plaintiff contract is made.[64] The doctrine of lex

or the petitioner, over the defendant or the contractus or lex loci contractus means the law of the

respondent, over the subject matter, over the issues of place where a contract is executed or to be

the case and, in cases involving property, over performed.[65] It controls the nature, construction, and

the res or the thing which is the subject of the validity of the contract[66] and it may pertain to the law

litigation.[57] In assailing the trial court's jurisdiction voluntarily agreed upon by the parties or the law

12
intended by them either expressly or
implicitly.[67] Under the state of the most significant
relationship rule, to ascertain what state law to apply
to a dispute, the court should determine which state
has the most substantial connection to the occurrence
and the parties. In a case involving a contract, the
court should consider where the contract was made,
was negotiated, was to be performed, and the
domicile, place of business, or place of incorporation
of the parties.[68] This rule takes into account several
contacts and evaluates them according to their relative
importance with respect to the particular issue to be
resolved.[69]
Since these three principles in conflict of laws make
reference to the law applicable to a dispute, they are
rules proper for the second phase, the choice of
law.[70] They determine which state's law is to be
applied in resolving the substantive issues of a
conflicts problem.[71] Necessarily, as the only issue in
this case is that of jurisdiction, choice-of-law rules are
not only inapplicable but also not yet called for.
Further, petitioners' premature invocation of choice-
of-law rules is exposed by the fact that they have not
yet pointed out any conflict between the laws
of Japan and ours. Before determining which law
should apply, first there should exist a conflict of laws
situation requiring the application of the conflict of
laws rules.[72] Also, when the law of a foreign country
is invoked to provide the proper rules for the solution
of a case, the existence of such law must be pleaded
and proved.[73]
It should be noted that when a conflicts case, one
involving a foreign element, is brought before a court
or administrative agency, there are three alternatives
open to the latter in disposing of it: (1) dismiss the
case, either because of lack of jurisdiction or refusal to
assume jurisdiction over the case; (2) assume
jurisdiction over the case and apply the internal law of
the forum; or (3) assume jurisdiction over the case
and take into account or apply the law of some other
State or States.[74] The courts power to hear cases and
controversies is derived from the Constitution and the
laws. While it may choose to recognize laws of foreign
nations, the court is not limited by foreign sovereign
law short of treaties or other formal agreements, even
in matters regarding rights provided by foreign
sovereigns.[75]
Neither can the other ground raised, forum
non conveniens,[76] be used to deprive the trial court of
its jurisdiction herein. First, it is not a proper basis for
a motion to dismiss because Section 1, Rule 16 of the
Rules of Court does not include it as a
ground.[77] Second, whether a suit should be
entertained or dismissed on the basis of the said
doctrine depends largely upon the facts of the
particular case and is addressed to the sound
discretion of the trial court.[78] In this case, the RTC
decided to assume jurisdiction. Third, the propriety of
dismissing a case based on this principle requires a
factual determination; hence, this conflicts principle is
more properly considered a matter of defense.[79]
Accordingly, since the RTC is vested by law with the
power to entertain and hear the civil case filed by
respondent and the grounds raised by petitioners to
assail that jurisdiction are inappropriate, the trial and
appellate courts correctly denied the petitioners
motion to dismiss.
WHEREFORE, premises considered, the
petition for review on certiorari is DENIED.
SO ORDERED.
13
 [10] Id. at 39-41.
[11] Id. at 109.
[12] Id. at 53-57.
ANTONIO EDUARDO B. NACHURA [13] Id. at 42-43.
Associate Justice [14] 13 Phil. 236 (1909).
[15] Insular Government v. Frank, id. at 240.
[16] CA rollo (CA-G.R. SP No. 60827), pp. 25-26.
WE CONCUR: [17] Id. at 27-28.
[18] CA rollo (CA-G.R. SP No. 60205), pp. 2-42.
[19] Id. at 44. The August 23, 2000 Resolution penned

by Associate Justice Delilah Vidallon-Magtolis

CONSUELO YNARES-SANTIAGO (retired), with the concurrence of Associate Justices
Associate Justice Eloy R. Bello, Jr. (retired) and Elvi John S. Asuncion
Chairperson (dismissed) pertinently provides as follows:
A cursory reading of the petition indicates no
statement as to the date when the petitioners filed
their motion for reconsideration and when they
MA. ALICIA AUSTRIA- MINITA V. CHICO- received the order of denial thereof, as required in
MARTINEZ NAZARIO Section 3, paragraph 2, Rule 46 of the 1997 Rules of
Associate Justice Associate Justice Civil Procedure as amended by Circular No. 39-98
dated August 18, 1998 of the Supreme Court.
Moreover, the verification and certification of non-
forum shopping was executed by petitioner Kazuhiro
RUBEN T. REYES Hasegawa for both petitioners without any indication
Associate Justice that the latter had authorized him to file the same.
WHEREFORE, the [petition] is DENIED due
course and DISMISSED outright.
ATTESTATION SO ORDERED.
[20] Id. at 45.
I attest that the conclusions in the above Decision [21] CA rollo (CA-G.R. SP No. 60827), pp. 2-24.
were reached in consultation before the case was [22] Supra note 1.
assigned to the writer of the opinion of the Courts [23] Id. at 222.
Division. [24] Supra note 2.
[25] Rollo, pp. 3-35.
[26] Id. at 15.
[27] See Spouses Melo v. Court of Appeals, 376 Phil. 204,
CONSUELO YNARES-SANTIAGO 213-214 (1999), in which the Supreme Court ruled
Associate Justice that compliance with the certification against forum
Chairperson, Third Division shopping is separate from, and independent of, the
avoidance of forum shopping itself. Thus, there is a
difference in the treatmentin terms of imposable
sanctionsbetween failure to comply with the
certification requirement and violation of the
CERTIFICATION prohibition against forum shopping. The former is
merely a cause for the dismissal, without prejudice, of
Pursuant to Section 13, Article VIII of the Constitution the complaint or initiatory pleading, while the latter is
and the Division Chairperson's Attestation, I certify a ground for summary dismissal thereof and
that the conclusions in the above Decision had been constitutes direct contempt. See also Philippine
reached in consultation before the case was assigned Radiant Products, Inc. v. Metropolitan Bank & Trust
to the writer of the opinion of the Courts Division. Company, Inc., G.R. No. 163569, December 9, 2005, 477
SCRA 299, 314, in which the Court ruled that the
dismissal due to failure to append to the petition the
board resolution authorizing a corporate officer to file
REYNATO S. PUNO the same for and in behalf of the corporation is
Chief Justice without prejudice. So is the dismissal of the petition
for failure of the petitioner to append thereto the
requisite copies of the assailed order/s.
[28] See Torres v. Specialized Packaging Development
[1] Penned by Associate Justice Bienvenido L. Reyes, Corporation, G.R. No. 149634, July 6, 2004, 433 SCRA
with the late Associate Justice Eubulo G. Verzola and 455, 463-464, in which the Court made the
Associate Justice Marina L. Buzon, concurring; rollo, pronouncement that the requirement of verification is
pp. 37-44. simply a condition affecting the form of pleadings, and
[2] Id. at 46-47.
noncompliance therewith does not necessarily render
[3] CA rollo (CA-G.R. SP No. 60827), p. 84.
it fatally defective.
[4] Id. at 116-120. [29] Section 3, Rule 46 of the Rules of Court pertinently
[5] Id. at 32-36.
states that x x x [i]n actions filed under Rule 65, the
[6] Id. at 85.
petition shall further indicate the material dates
[7] Id. at 121-148.
showing when notice of the judgment or final order or
[8] Id. at 166-171.
resolution subject thereof was received, when a
[9] Id. at 38.
motion for new trial or reconsideration, if any, was

14
filed and when notice of the denial thereof was
received. x x x
[30] Estrera v. Court of Appeals, G.R. Nos. 154235-
36, August 16, 2006, 499 SCRA 86, 95;
and Spouses Melo v. Court of Appeals, supra note 27, at
214.
[31] The Rules of Court pertinently provides in Section
4, Rule 65 that [t]he petition may be filed not later
than sixty (60) days from notice of the judgment,
order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether
such motion is required or not, the sixty (60) day
period shall be counted from notice of the denial of
said motion. x x x
[32] Delgado v. Court of Appeals, G.R. No.
137881, December 21, 2004, 447 SCRA 402, 415.
[33] CA rollo (CA-G.R. SP No. 60827), p. 21.
[34] Fuentebella v. Castro, G.R. No. 150865, June 30,
2006, 494 SCRA 183, 193-194; see Roxas v. Court of
Appeals, 415 Phil. 430 (2001).
[35] Rollo, p. 33; CA rollo (CA-G.R. SP No. 60827), p.
23. The Authorization dated September 4,
2000pertinently reads:
I, KEN TAKAGI, President and Chief Executive Officer
of NIPPON ENGINEERING CONSULTANTS CO., LTD., a
corporation duly organized and existing in accordance
with the corporation laws of Japan, with principal
address at 3-23-1 Komagome, Toshima-ku Tokyo,
Japan, hereby authorize its International Division
General Manager, Mr. Kazuhiro Hasegawa, to sign and
act for and in behalf of Nippon Engineering
Consultants Co., Ltd., for purposes of filing a Petition
for Certiorari before the proper tribunal in the case
entitled: Kazuhiro Hasegawa and Nippon Engineering
Consultants Co., Ltd. vs. Minoru Kitamura and Hon.
Avelino C. Demetria of the Regional Trial Court, Fourth
Judicial Region-Branch 85, Lipa City, and to do such
other things, acts and deals which may be necessary
and proper for the attainment of the said
objectives [Underscoring ours].
[36] Cf. Orbeta v. Sendiong, G.R. No. 155236, July 8, 2005,
463 SCRA 180, 199-200, in which the Court ruled that
the agent's signing therein of the verification and
certification is already covered by the provisions of
the general power of attorney issued by the principal.
[37] Barcenas v. Tomas, G.R. No. 150321, March 31,
2005, 454 SCRA 593, 604.
[38] Dated October 11, 2001; rollo, pp. 192-203.
[39] Dated August 17, 2001, id. at 202.
[40] San Pablo Manufacturing Corporation v.
Commissioner of Internal Revenue, G.R. No. 147749,
June 22, 2006, 492 SCRA 192, 197; LDP Marketing, Inc.
v. Monter, G.R. No. 159653, January 25, 2006, 480
SCRA 137, 142; Expertravel & Tours, Inc. v. Court of
Appeals, G.R. No. 152392, May 26, 2005, 459 SCRA
147, 160.
[41] 392 Phil. 596, 603-604 (2000).
[42] Loquias v. Office of the Ombudsman, id. at 604.
[43] Santos v. Court of Appeals, 413 Phil. 41, 54 (2001).
[44] Yutingco v. Court of Appeals, 435 Phil. 83, 92
(2002).
[45] Bank of America NT & SA v. Court of Appeals, 448
Phil. 181, 193 (2003). As stated herein, under certain
situations resort to certiorari is considered
appropriate when: (1) the trial court issued the order
without or in excess of jurisdiction; (2) there is patent
grave abuse of discretion by the trial court; or (3)
appeal would not prove to be a speedy and adequate
remedy as when an appeal would not promptly relieve
a defendant from the injurious effects of the patently
mistaken order maintaining the plaintiffs baseless
action and compelling the defendants needlessly to go
through a protracted trial and clogging the court
dockets with another futile case.
[46] Rollo, p. 228.
[47] Id. at 234-245.
[48] Dated June 5, 2000; CA rollo (CA-G.R. SP No.
60827), pp. 53-57.
[49] Id. at 55.
[50] Id. at 14.
[51] Rollo, pp. 19-28.
[52] 453 Phil. 927, 934 (2003).
[53] Scoles, Hay, Borchers, Symeonides, Conflict of Laws,
3rd ed. (2000), p. 3.
[54] Coquia and Aguiling-Pangalangan, Conflict of Laws,
1995 ed., p. 64.
[55] Supra note 53, at 162, citing Hay, The Interrelation
of Jurisdictional Choice of Law in U.S. Conflicts Law, 28
Int'l. & Comp. L.Q. 161 (1979).
[56] Shaffer v. Heitner, 433 U.S. 186, 215; 97 S.Ct. 2569,
2585 (1977), citing Justice Black's Dissenting Opinion
in Hanson v. Denckla, 357 U.S. 235, 258; 78 S. Ct. 1228,
1242 (1958).
[57] See Regalado, Remedial Law Compendium, Vol. 1,
8th Revised Ed., pp. 7-8.
[58] U.S. v. De La Santa, 9 Phil. 22, 25-26 (1907).
[59] Bokingo v. Court of Appeals, G.R. No. 161739, May 4,
2006, 489 SCRA 521, 530; Tomas Claudio Memorial
College, Inc. v. Court of Appeals, 374 Phil. 859, 864
(1999).
[60] See RULES OF COURT, Rule 16, Sec. 1.
[61] See In Re: Calloway, 1 Phil. 11, 12 (1901).
[62] Bokingo v. Court of Appeals, supra note 59, at 531-
533; Radio Communications of the Phils. Inc. v. Court of
Appeals, 435 Phil. 62, 68-69 (2002).
[63] Garcia v. Recio, 418 Phil. 723, 729 (2001); Board of
Commissioners (CID) v. Dela Rosa, G.R. Nos. 95122-23,
May 31, 1991, 197 SCRA 853, 888.
[64] <http://web2.westlaw.com/search/default.wl?rs=
WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+lex+loci+celebrationis+)&d
b=DIBLACK&utid=%7bD0AE3BEE-91BC-4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefau
lt.wl&mt=WLIGeneralSubscription> (visited October
22, 2007).
[65] <http://web2.westlaw.com/search/default.wl?rs=
WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+lex+loci+contractus+)&db=
DIBLACK&utid=%7bD0AE3BEE-91BC-4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefau
lt.wl&mt=WLIGeneralSubscription>(visited October
22, 2007).
[66] Id.
[67] Philippine Export and Foreign Loan Guarantee
Corporation v. V.P. Eusebio Construction, Inc., G.R. No.
140047, July 13, 2004, 434 SCRA 202, 214-215.
[68] <http://web2.westlaw.com/search/default.wl?rs=
WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+most+significant+relations
hip+)&db=DIBLACK&utid=%7bD0AE3BEE-91BC-
4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefau
lt.wl&mt= WLIGeneralSubscription> (visited October
22, 2007).
[69] Saudi Arabian Airlines v. Court of Appeals, 358 Phil.
105, 127 (1998). The contacts which were taken into
account in this case are the following: (a) the place
where the injury occurred; (b) the place where the
conduct causing the injury occurred; (c) the domicile,
15
residence, nationality, place of incorporation and place
of business of the parties; and (d) the place where the
relationship, if any, between the parties is centered.
[70] See Auten v. Auten, 308 N.Y 155, 159-160 (1954).
[71] Supra note 53, at 117-118; supra note 54, at 64-65.
[72] Laurel v. Garcia, G.R. Nos. 92013 and 92047, July
25, 1990, 187 SCRA 797, 810-811.
[73] International Harvester Company in Russia v.
Hamburg-American Line, 42 Phil. 845, 855 (1918).
[74] Salonga, Private International Law, 1995 ed., p. 44.
[75] Veitz, Jr. v. Unisys Corporation, 676 F. Supp. 99, 101
(1987), citing Randall v. Arabian Am. Oil. Co., 778 F. 2d
1146 (1985).
[76] Under this rule, a court, in conflicts cases, may
refuse impositions on its jurisdiction where it is not
the most convenient or available forum and the parties
are not precluded from seeking remedies elsewhere
(Bank of America NT & SA v. Court of Appeals, supra
note 45, at 196). The court may refuse to entertain a
case for any of the following practical reasons: (1) the
belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case
transpired in a foreign jurisdiction or the material
witnesses have their residence there; (2) the belief
that the non-resident plaintiff sought the forum, a
practice known as forum shopping, merely to secure
procedural advantages or to convey or harass the
defendant; (3) the unwillingness to extend local
judicial facilities to non-residents or aliens when the
docket may already be overcrowded; (4) the
inadequacy of the local judicial machinery for
effectuating the right sought to be maintained; and (5)
the difficulty of ascertaining foreign law (Puyat v.
Zabarte, 405 Phil. 413, 432 [2001]).
[77] Philsec Investment Corporation v. Court of Appeals,
G.R. No. 103493, June 19, 1997, 274 SCRA 102, 113.
[78] Bank of America NT & SA v. Court of Appeals, supra
note 45, at 196.
[79] Bank of America NT & SA v. Court of Appeals, supra
note 45, at 197.
THIRD DIVISION
G.R. Nos. 178382-83, September 23, 2015
CONTINENTAL MICRONESIA,
INC., Petitioner, v. JOSEPH BASSO, Respondent.
DECISION
JARDELEZA, J.:
This is a Petition for Review on Certiorari1 under Rule
45 of the levised Rules of Court assailing the
Decision2 dated May 23, 2006 and Resolution3 dated
June 19, 2007 of the Court of Appeals in the
consolidated cases CA-G.R. SP No. 83938 and CA-G.R.
SP No. 84281. These assailed Decision and Resolution
set aside the Decision4 dated November 28, 2003 of
the National Labor Relations Commission (NLRC)
declaring Joseph Basso's (Basso) dismissal illegal, and
ordering the payment of separation pay as alternative
to reinstatement and full backwages until the date of
the Decision.
The Facts
Petitioner Continental Micronesia, Inc. (CMI) is a
foreign corporation organized and existing under the
laws of and domiciled in the United States of America
(US). It is licensed to do business in the
Philippines.5 Basso, a US citizen, resided in the
Philippines prior to his death.6
During his visit to Manila in 1990, Mr. Keith R. Braden
(Mr. Braden), Managing Director-Asia of Continental
Airlines, Inc. (Continental), offered Basso the position
of General Manager of the Philippine Branch of
Continental. Basso accepted the offer.7
It was not until much later that Mr. Braden, who had
since returned to the US, sent Basso the employment
contract8 dated February 1, 1991, which Mr. Braden
had already signed. Basso then signed the employment
contract and returned it to Mr. Braden as instructed.
On November 7, 1992, CMI took over the Philippine
operations of Continental, with Basso retaining his
position as General Manager.9
On December 20, 1995, Basso received a letter from
Mr. Ralph Schulz (Mr. Schulz), who was then CMI's
Vice President of Marketing and Sales, informing
Basso that he has agreed to work in CMI as a
consultant on an "as needed basis" effective February
1, 1996 to July 31, 1996. The letter also informed
Basso that: (1) he will not receive any monetary
compensation but will continue being covered by the
insurance provided by CMI; (2) he will enjoy travel
privileges; and (3) CMI will advance Php1,140,000.00
for the payment of housing lease for 12 months. 10
On January 11, 1996, Basso wrote a counter-
proposal11 to Mr. Schulz regarding his employment
status in CMI. On March 14, 1996, Basso wrote another
letter addressed to Ms. Marty Woodward (Ms.
Woodward) of CMI's Human Resources Department
inquiring about the status of his employment.12 On the
same day, Ms. Woodward responded that pursuant to
the employment contract dated February 1, 1991,
Basso could be terminated at will upon a thirty-day
notice. This notice was allegedly the letter Basso
received from Mr. Schulz on December 20, 1995. Ms.
Woodward also reminded Basso of the telephone
conversation between him, Mr. Schulz and Ms.
Woodward on December 19, 1995, where they
informed him of the company's decision to relieve him
as General Manager. Basso, instead, was offered the
position of consultant to CMI. Ms. Woodward also
informed Basso that CMI rejected his counter-proposal
and, thus, terminated his employment effective
January 31, 1996. CMI offered Basso a severance pay,
in consideration of the Php1,140,000.00 housing
advance that CMI promised him.13
Basso filed a Complaint for Illegal Dismissal with
Moral and Exemplary Damages against CMI on
December 19, 1996.14 Alleging the presence of foreign
elements, CMI filed a Motion to Dismiss 15 dated
February 10, 1997 on the ground of lack of jurisdiction
over the person of CMI and the subject matter of the
controversy. In an Order16 dated August 27, 1997, the
Labor Arbiter granted the Motion to Dismiss. Applying
the doctrine of lex loci contractus, the Labor Arbiter
held that the terms and provisions of the employment
contract show that the parties did not intend to apply
16
our Labor Code (Presidential Decree No. 442). The
Labor Arbiter also held that no employer-employee
relationship existed between Basso and the branch
office of CMI in the Philippines, but between Basso and
the foreign corporation itself.
On appeal, the NLRC remanded the case to the Labor
Arbiter for the determination of certain facts to settle
the issue on jurisdiction. NLRC ruled that the issue on
whether the principle of lex loci contractus or lex loci
celebrationis should apply has to be further threshed
out.17
Labor Arbiter's Ruling
Labor Arbiter Madjayran H. Ajan in his
Decision18 dated September 24, 1999 dismissed the
case for lack of merit and jurisdiction.
The Labor Arbiter agreed with CMI that the
employment contract was xecuted in the US "since the
letter-offer was under the Texas letterhead and the
acceptance of Complainant was returned
there."19 Thus, applying the doctrine of lex loci
celebrationis, US laws apply. Also, applying lex loci
contractus, the Labor Arbiter ruled that the parties did
not intend to apply Philippine laws, thus:
Although the contract does not state what law shall
apply, it is obvious that Philippine laws were not
written into it. More specifically, the Philippine law on
taxes and the Labor Code were not intended by the
parties to apply, otherwise Par. 7 on the payment by
Complainant U.S. Federal and Home State income
taxes, and Pars. 22/23 on termination by 30-day prior
notice, will not be there. The contract was prepared in
contemplation of Texas or U.S. laws where Par. 7 is
required and Pars. 22/23 is allowed.20
The Labor Arbiter also ruled that Basso was
terminated for a valid cause based on the allegations
of CMI that Basso committed a series of acts that
constitute breach of trust and loss of confidence.21
The Labor Arbiter, however, found CMI to have
voluntarily submitted to his office's jurisdiction. CMI
participated in the proceedings, submitted evidence
on the merits of the case, and sought affirmative relief
through a motion to dismiss.22
NLRC's Ruling
On appeal, the NLRC Third Division promulgated its
Decision23 dated November 28, 2003, the decretal
portion of which reads:
WHEREFORE, the decision dated 24 September 1999
is VACATED and SET ASIDE. Respondent CMI is
ordered to pay complainant the amount of
US$5,416.00 for failure to comply with the due notice
requirement. The other claims are dismissed.
SO ORDERED.24
The NLRC did not agree with the pronouncement of
the Labor Arbiter that his office has no jurisdiction
over the controversy. It ruled that the Labor Arbiter
acquired jurisdiction over the case when CMI
voluntarily submitted to his office's jurisdiction by
presenting evidence, advancing arguments in support
of the legality of its acts, and praying for reliefs on the
merits of the case.25cralawred
On the merits, the NLRC agreed with the Labor Arbiter
that Basso was dismissed for just and valid causes on
the ground of breach of trust and loss of confidence.
The NLRC ruled that under the applicable rules on loss
of trust and confidence of a managerial employee, such
as Basso, mere existence of a basis for believing that
such employee has breached the trust of his employer
suffices. However, the NLRC found that CMI denied
Basso the required due process notice in his
dismissal.26
Both CMI and Basso filed their respective Motions for
Reconsideration dated January 15, 200427 and January
8, 2004.28 Both motions were dismissed in separate
Resolutions dated March 15, 200429 and February 27,
2004,30 respectively.
Basso filed a Petition for Certiorari dated April 16,
2004 with the Court of Appeals docketed as CA-G.R. SP
No. 83938.31 Basso imputed grave abuse of discretion
on the part of the NLRC in ruling that he was validiy
dismissed. CMI filed its own Petition
for Certiorari dated May 13, 2004 docketed as CA-G.R.
SP No. 84281,32 alleging that the NLRC gravely abused
its discretion when it assumed jurisdiction over the
person of CMI and the subject matter of the case.
In its Resolution dated October 7, 2004, the Court of
Appeals consolidated the two cases33 and ordered the
parties to file their respective Memoranda.
The Court of Appeal's Decision
The Court of Appeals promulgated the now assailed
Decision34 dated May 23, 2006, the relevant
dispositive portion of which reads:
WHEREFORE, the petition of Continental docketed as
CA-G.R. SP No. 84281 is DENIED DUE
COURSE and DISMISSED.
On the other hand the petition of Basso docketed as
CA-G.R. SP No. 83938 is GIVEN DUE
COURSE and GRANTED, and accordingly, the assailed
Decision dated November 28, 2003 and Resolution
dated February 27, 2004 of the NLRC are SET
ASIDE and VACATED. Instead judgment is rendered
hereby declaring the dismissal of Basso illegal and
ordering Continental to pay him separation pay
equivalent to one (1) month pay for every year of
service as an alternative to reinstatement. Further,
ordering Continental to pay Basso his full backwages
from the date of his said illegal dismissal until date of
this decision. The claim for moral and exemplary
damages as well as attorney's fees are dismissed.35
The Court of Appeals ruled that the Labor Arbiter and
the NLRC had jurisdiction over the subject matter of
the case and over the parties. The Court of Appeals
explained that jurisdiction over the subject matter of
the action is determined by the allegations of the
complaint and the law. Since the case filed by Basso is
a termination dispute that is "undoubtedly cognizable
by the labor tribunals", the Labor Arbiter and the
NLRC had jurisdiction to rule on the merits of the case.
On the issue of jurisdiction over he person of the
parties, who are foreigners, the Court of Appeals ruled
that jurisdiction over the person of Basso was
acquired when he filed the complaint for illegal
dismissal, while jurisdiction over the person of CMI
was acquired through coercive process of service of
summons to its agent in the Philippines. The Court of
Appeals also agreed that the active participation of
17
CMI in the case rendered moot the issue on
jurisdiction.
On the merits of the case, the Court of Appeals
declared that CMI illegally dismissed Basso. The Court
of Appeals found that CMI's allegations of loss of trust
and confidence were not established. CMI "failed to
prove its claim of the incidents which were its alleged
bases for loss of trust or confidence."36 While
managerial employees can be dismissed for loss of
trust and confidence, there must be a basis for such
loss, beyond mere whim or caprice.
After the parties filed their Motions for
Reconsideration,37 the Court of Appeals promulgated
Resolution38dated June 19, 2007 denying CMI's
motion, while partially granting Basso's as to the
computation of backwages.
Hence, this petition, which raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED
IN REVIEWING THE FACTUAL FINDINGS OF THE
NLRC INSTEAD OF LIMITING ITS INQUIRY INTO
WHETHER OR NOT THE NLRC COMMITTED GRAVE
ABUSE OF DISCRETION.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED
IN RULING THAT THE LABOR ARBITER AND THE
NLRC HAD JURISDICTION TO HEAR AND TRY THE
ILLEGAL DISMISSAL CASE.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED
IN FINDING THAT BASSO WAS NOT VALIDLY
DISMISSED ON THE GROUND OF LOSS OF TRUST OR
CONFIDENCE.
We begin with the second issue on the jurisdiction of
the Labor Arbiter and the NLRC in the illegal dismissal
case. The first and third issues will be discussed
jointly.
The labor tribunals had jurisdiction over the parties
and the subject matter of the case.
CMI maintains that there is a conflict-of-laws issue
that must be settled to determine proper jurisdiction
over the parties and the subject matter of the case. It
also alleges that the existence of foreign elements calls
or the application of US laws and the doctrines of lex
loci celebrationis (the law of the place of the
ceremony), lex loci contractus (law of the place where
a contract is executed), and lex loci intentionis(the
intention of the parties as to the law that should
govern their agreement). CMI also invokes the
application of the rule of forum non conveniens to
determine the propriety of the assumption of
jurisdiction by the labor tribunals.
We agree with CMI that there is a conflict-of-laws issue
that needs to be resolved first. Where the facts
establish the existence of foreign elements, he case
presents a conflict-of-laws issue.39 The foreign element
in a case nay appear in different forms, such as in this
case, where one of the parties s an alien and the other
is domiciled in another state.
In Hasegawa v. Kitamura,40 we stated that in the
judicial resolution of conflict-of-laws problems, three
consecutive phases are involved: jurisdiction, choice of
law, and recognition and enforcement of judgments. In
resolving the conflicts problem, courts should ask the
following questions:
1. "Under the law, do I have jurisdiction over the
subject matter and the parties to this case?
2. "If the answer is yes, is this a convenient forum to
the parties, in light of the facts?
3. "If the answer is yes, what is the conflicts rule for
this particular problem?
4. "If the conflicts rule points to a foreign law, has said
law been properly pleaded and proved by the one
invoking it?
5. "If so, is the application or enforcement of the
foreign law in the forum one of the basic exceptions to
the application of foreign law? In short, is there any
strong policy or vital interest of the forum that is at
stake in this case and which should preclude the
application of foreign law?41
Jurisdiction is defined as the power and authority of
the courts to hear, try and decide cases. Jurisdiction
over the subject matter is conferred by the
Constitution or by law and by the material allegations
in the complaint, regardless of whether or not the
plaintiff is entitled to recover all or some of the claims
or reliefs sought therein.42 It cannot be acquired
through a waiver or enlarged by the omission of the
parties or conferred by the acquiescence of the
court.43 That the employment contract of Basso was
replete with references to US laws, and that it
originated from and was returned to the US, do not
automatically preclude our labor tribunals from
exercising jurisdiction to hear and try this case.
This case stemmed from an illegal dismissal complaint.
The Labor Code, under Article 217, clearly vests
original and exclusive jurisdiction to hear and decide
cases involving termination disputes to the Labor
Arbiter. Hence, the Labor Arbiter and the NLRC have
jurisdiction over the subject matter of the case.
As regards jurisdiction over the parties, we agree with
the Court of Appeals that the Labor Arbiter acquired
jurisdiction over the person of Basso, notwithstanding
his citizenship, when he filed his complaint against
CMI. On the other hand, jurisdiction over the person of
CMI was acquired through the coercive process of
service of summons. We note that CMI never denied
that it was served with summons. CMI has, in fact,
voluntarily appeared and participated in the
proceedings before the courts. Though a foreign
corporation, CMI is licensed to do business in the
Philippines and has a local business address here. The
purpose of the law in requiring that foreign
corporations doing business in the country be licensed
to do so, is to subject the foreign corporations to the
jurisdiction of our courts.44
Considering that the Labor Arbiter and the NLRC have
jurisdiction over the parties and the subject matter of
this case, these tribunals may proceed to try the case
even if the rules of conflict-of-laws or the convenience
of the parties point to a foreign forum, this being an
18
exercise of sovereign prerogative of the country where
the case is filed.45
The next question is whether the local forum is the
convenient forum in light of the facts of the case. CMI
contends that a Philippine court is an inconvenient
forum.
We disagree.
Under the doctrine of forum non conveniens, a
Philippine court in a conflict-of-laws case may assume
jurisdiction if it chooses to do so, provided, that the
following requisites are met: (1) that the Philippine
Court is one to which the parties may conveniently
resort to; (2) that the Philippine Court is in a position
to make an intelligent decision as to the law and the
facts; and (3) that the Philippine Court has or is likely
to have power to enforce its decision.46 All these
requisites are present here.
Basso may conveniently resort to our labor tribunals
as he and CMI lad physical presence in the Philippines
during the duration of the trial. CMI has a Philippine
branch, while Basso, before his death, was residing
here. Thus, it could be reasonably expected that no
extraordinary measures were needed for the parties to
make arrangements in advocating their respective
cases.
The labor tribunals can make an intelligent decision as
to the law and facts. The incident subject of this case
(i.e. dismissal of Basso) happened in the Philippines,
the surrounding circumstances of which can be
ascertained without having to leave the Philippines.
The acts that allegedly led to loss of trust and
confidence and Basso's eventual dismissal were
committed in the Philippines. As to the law, we hold
that Philippine law is the proper law of he forum, as
we shall discuss shortly. Also, the labor tribunals have
the power to enforce their judgments because they
acquired jurisdiction over the persons of both parties.
Our labor tribunals being the convenient fora, the next
question is what law should apply in resolving this
case.
The choice-of-law issue in a conflict-of-laws case seeks
to answer the following important questions: (1) What
legal system should control a given situation where
some of the significant facts occurred in two or more
states; and (2) to what extent should the chosen legal
system regulate the situation.47 These questions are
entirely different from the question of jurisdiction that
only seeks to answer whether the courts of a state
where the case is initiated have jurisdiction to enter a
judgment.48 As such, the power to exercise jurisdiction
does not automatically give a state constitutional
authority to apply forum law.49
CMI insists that US law is the applicable choice-of-law
under the principles of lex loci celebrationis and lex loci
contractus. It argues that the contract of employment
originated from and was returned to the US after
Basso signed it, and hence, was perfected there. CMI
further claims that the references to US law in the
employment contract show the parties' intention to
apply US law and not ours. These references are:
a. Foreign station allowance of forty percent
(40%) using the "U.S. State Department Index,
the base being Washington, D.C."
b. Tax equalization that made Basso responsible
for "federal and any home state income taxes."
c. Hardship allowance of fifteen percent (15%)
of base pay based upon the "U.S. Department
of State Indexes of living costs abroad."
d. The employment arrangement is "one at will,
terminable by either party without any
further liability on thirty days prior written
notice."50
CMI asserts that the US law on labor relations
particularly, the US Railway Labor Act sanctions
termination-at-will provisions in an employment
contract. Thus, CMI concludes that if such laws were
applied, there would have been no illegal dismissal to
speak of because the termination-at-will provision in
Basso's employment contract would have been
perfectly valid.
We disagree.
In Saudi Arabian Airlines v. Court of Appeals,51 we
emphasized that an essential element of conflict rules
is the indication of a "test" or "connecting factor" or
"point of contact". Choice-of-law rules invariably
consist of a factual relationship (such as property
right, contract claim) and a connecting fact or point of
contact, such as the situs of the res, the place of
celebration, the place of performance, or the place of
wrongdoing. Pursuant to Saudi Arabian Airlines, we
hold that the "test factors," "points of contact" or
"connecting factors" in this case are the
following:chanRoblesvirtualLawlibrary
(1) The nationality, domicile or residence of
Basso;ChanRoblesVirtualawlibrary
(2) The seat of CMI;ChanRoblesVirtualawlibrary
(3) The place where the employment contract has
been made, the locus
actus;ChanRoblesVirtualawlibrary
(4) The place where the act is intended to come into
effect, e.g., the place of performance of contractual
duties;ChanRoblesVirtualawlibrary
(5) The intention of the contracting parties as to the
law that should govern their agreement, the lex loci
intentionis; and
(6) The place where judicial or administrative
proceedings are instituted or done.52
Applying the foregoing in this case, we conclude that
Philippine law the applicable law. Basso, though a US
citizen, was a resident here from he time he was hired
by CMI until his death during the pendency of the case.
CMI, while a foreign corporation, has a license to do
business in the Philippines and maintains a branch
here, where Basso was hired to work. The contract of
employment was negotiated in the Philippines. A
purely consensual contract, it was also perfected in the
Philippines when Basso accepted the terms and
19
conditions of his employment as offered by CMI. The
place of performance relative to Biasso's contractual
duties was in the Philippines. The alleged prohibited
acts of Basso that warranted his dismissal were
committed in the Philippines.
Clearly, the Philippines is the state with the most
significant relationship to the problem. Thus, we hold
that CMI and Basso intended Philippine law to govern,
notwithstanding some references made to US laws and
the fact that this intention was not expressly stated in
the contract. We explained in Philippine Export and
Foreign Loan Guarantee Corporation v. V. P. Eusebio
Construction, Inc.53 that the law selected may be
implied from such factors as substantial connection
with the transaction, or the nationality or domicile of
the parties.54 We cautioned, however, that while
Philippine courts would do well to adopt the first and
most basic rule in most legal systems, namely, to allow
the parties to select the law applicable to their
contract, the selection is subject to the limitation that
it is not against the law, morals, or public policy of the
forum.55
Similarly, in Bank of America, NT&SA v. American
Realty Corporation,56 we ruled that a foreign law,
judgment or contract contrary to a sound and
established public policy of the forum shall not be
applied. Thus:
Moreover, foreign law should not be applied when its
application would work undeniable injustice to the
citizens or residents of the forum. To give justice is the
most important function of law; hence, a law, or
judgment or contract that is obviously unjust negates
the fundamental principles of Conflict of Laws.57
Termination-at-will is anathema to the public policies
on labor protection espoused by our laws and
Constitution, which dictates that no worker shall be
dismissed except for just and authorized causes
provided by law and after due process having been
complied with.58 Hence, the US Railway Labor Act,
which sanctions termination-at-will, should not be
applied in this case.
Additionally, the rule is that there is no judicial notice
of any foreign law. As any other fact, it must be alleged
and proved.59 If the foreign law is not properly
pleaded or proved, the presumption of identity or
similarity of the foreign law to our own laws,
otherwise known as processual presumption, applies.
Here, US law may have been properly pleaded but it
was not proved in the labor tribunals.
Having disposed of the issue on jurisdiction, we now
rule on the first and third issues.
The Court of Appeals may review the factual
findings of the NLRC in a Rule 65 petition.
CMI submits that the Court of Appeals overstepped the
boundaries of the limited scope of
its certiorarijurisdiction when instead of ruling on the
existence of grave abuse of discretion, it proceeded to
pass upon the legality and propriety of Basso's
dismissal. Moreover, CMI asserts that it was error on
the part of the Court of Appeals to re-evaluate the
evidence and circumstances surrounding the dismissal
of Basso.
We disagree.
The power of the Court of Appeals to review NLRC
decisions via a Petition for Certiorari under Rule 65 of
the Revised Rules of Court was settled in our decision
in St. Martin Funeral Home v. NLRC.60 The general rule
is that certiorari does not lie to review errors of
judgment of the trial court, as well as that of a quasi-
judicial tribunal. In certiorari proceedings, judicial
review does not go as far as to examine and assess the
evidence of the parties and to weigh their probative
value.61 However, this rule admits of exceptions.
In Globe Telecom, Inc. v. Florendo-Flores,62 we stated:
In the review of an NLRC decision through a special
civil action for certiorari, resolution is confined only to
issues of jurisdiction and grave abuse of discretion on
the part of the labor tribunal. Hence, the Court refrains
from reviewing factual assessments of lower courts
and agencies exercising adjudicative functions, such as
the NLRC. Occasionally, however, the Court is
constrained to delve into factual matters where, as in
the instant case, the findings of the NLRC contradict
those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity
jurisdiction may look into the records of the case and
re-examine the questioned findings. As a corollary, this
Court is clothed with ample authority to review
matters, even if they are not assigned as errors in their
appeal, if it finds that their consideration is necessary
to arrive at a just decision of the case. The same
principles are now necessarily adhered to and are
applied by the Court of Appeals in its expanded
jurisdiction over labor cases elevated through a
petition for certiorari; thus, we see no error on its part
when it made anew a factual determination of the
matters and on that basis reversed the ruling of the
NLRC.63 (Citations omitted.)
Thus, the Court of Appeals may grant the petition
when the factual hidings complained of are not
supported by the evidence on record; when its
necessary to prevent a substantial wrong or to do
substantial justice; when the findings of the NLRC
contradict those of the Labor Arbiter; and when
necessary to arrive at a just decision of the case.64 To
make these findings, the Court of Appeals necessarily
has to look at the evidence and make its own factual
determination.65
Since the findings of the Labor Arbiter differ with that
of the NLRC, we find that the Court of Appeals
correctly exercised its power to review the evidence
and the records of the illegal dismissal case.
Basso was illegally dismissed.
It is of no moment that Basso was a managerial
employee of CMI Managerial employees enjoy security
of tenure and the right of the management to dismiss
must be balanced against the managerial employee's
right to security of tenure, which is not one of the
guaranties he gives up.66
In Apo Cement Corporation v. Baptisma,67 we ruled that
for an employer to validly dismiss an employee on the
ground of loss of trust and confidence under Article
282 (c) of the Labor Code, the employer must observe
the following guidelines: 1) loss of confidence should
not be simulated; 2) it should not be used as
subterfuge for causes which are improper, illegal or
unjustified; 3) it may not be arbitrarily asserted in the
20
face of overwhelming evidence to the contrary; and 4)
it must be genuine, not a mere afterthought to justify
earlier action taken in bad faith. More importantly, it
must be based on a willful breach of trust and founded
on clearly established facts.
We agree with the Court of Appeals that the dismissal
of Basso was not founded on clearly established facts
and evidence sufficient to warrant dismissal from
employment. While proof beyond reasonable doubt is
not required to establish loss of trust and confidence,
substantial evidence is required and on the employer
rests the burden to establish it.68 There must be some
basis for the loss of trust, or that the employer has
reasonable ground to believe that the employee is
responsible for misconduct, which renders him
unworthy of the trust and confidence demanded by his
position.69
CMI alleges that Basso committed the
following:chanRoblesvirtualLawlibrary
(1)Basso delegated too much responsibility to the
General Sales Agent and relied heavily on its
judgments.70
(2)Basso excessively issued promotional tickets to his
friends who had no direct business with CMI.71
(3)The advertising agency that CMI contracted had to
deal directly with Guam because Basso was hardly
available.72 Mr. Schulz discovered that Basso
exceeded the advertising budget by $76,000.00 in
1994 and by $20,000.00 in 1995.73
(4)Basso spent more time and attention to his
personal businesses and was reputed to own
nightclubs in the Philippines.74
(5)Basso used free tickets and advertising money to
promote his personal business,75 such as a
brochure that jointly advertised one of Basso's
nightclubs with CMI.
We find that CMI failed to discharge its burden to
prove the above acts. CMI merely submitted affidavits
of its officers, without any other corroborating
evidence. Basso, on the other hand, had adequately
explained his side. On the advertising agency and
budget issues raised by CMI, he explained that these
were blatant lies as the advertising needs of CMI were
centralized in its Guam office and the Philippine office
was not authorized to deal with CMI's advertising
agency, except on minor issues.76 Basso further stated
that under CMI's existing policy, ninety percent (90%)
of the advertising decisions were delegated to the
advertising firm of McCann-Ericsson in Japan and only
ten percent (10%) were left to the Philippine
office.77 Basso also denied the allegations of owning
nightclubs and promoting his personal businesses and
explained that it was illegal for foreigners in the
Philippines to engage in retail trade in the first place.
Apart from these accusations, CMI likewise presented
the findings of the audit team headed by Mr. Stephen
D. Goepfert, showing that "for the period of 1995 and
1996, personal passes for Continental and other
airline employees were noted (sic) to be issued for
which no service charge was collected."78 The audit
cited the trip pass log of a total of 10 months. The trip
log does not show, however, that Basso caused all the
ticket issuances. More, half of the trips in the log
occurred from March to July of 1996,79 a period
beyond the tenure of Basso. Basso was terminated
effectively on January 31, 1996 as indicated in the
letter of Ms. Woodward.80
CMI also accused Basso of making "questionable
overseas phone calls". Basso, however, adequately
explained in his Reply81 that the phone calls to Italy
and Portland, USA were made for the purpose of
looking for a technical maintenance personnel with US
Federal Aviation Authority qualifications, which CMI
needed at that time. The calls to the US were also
made in connection with his functions as General
Manager, such as inquiries on his tax returns filed in
Nevada. Biasso also explained that the phone
lines82 were open direct lines that all personnel were
free to use to make direct long distance calls.83
Finally, CMI alleged that Basso approved the
disbursement of Php80,000.00 to cover the transfer
fee of the Manila Polo Club share from Mr. Kenneth
Glover, the previous General Manager, to him. CMI
claimed that "nowhere in the said contract was it
likewise indicated that the Manila Polo Club share was
part of the compensation package given by CMI to
Basso."84 CMI's claims are not credible. Basso
explained that the Manila Polo Club share was offered
to him as a bonus to entice him to leave his then
employer, United Airlines. A letter from Mr. Paul J.
Casey, former president of Continental, supports
Basso.85 In the letter, Mr. Casey explained:
As a signing bonus, and a perk to attract Mr. Basso to
join Continental Airlines, he was given the Manila Polo
Club share and authorized to have the share re-issued
in his name. In addition to giving Mr. Basso the Manila
Polo Club share, Continental agreed to pay the dues for
a period of three years and this was embodied in his
contract with Continental. This was all clone with my
knowledge and approval.86
Clause 14 of the employment contract also states:
Club Memberships: The Company will locally pay
annual dues for membership in a club in Manila that
your immediate supervisor and I agree is of at least
that value to Continental through you in your role as
our General Manager for the Philippines.87
Taken together, the above pieces of evidence suggest
that the Manila Polo Club share was part of Basso's
compensation package and thus he validly used
company funds to pay for the transfer fees. If doubts
exist between the evidence presented by the employer
and the employee, the scales of justice must be tilted in
favor of the latter.88
Finally, CMI violated procedural due process in
terminating Basso. In King of Kings Transport, Inc. v.
Mamac89 we detailed the procedural due process steps
in termination of employment:
To clarify, the following should be considered in
terminating the services of
employees:chanRoblesvirtualLawlibrary
(1) The first written notice to be served on the
employees should contain the specific causes or
grounds for termination against them, and a directive
that the employees are given the opportunity to
submit their written explanation within a reasonable
period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that
management must accord to the employees to enable
them to prepare adequately for their defense. This
should be construed as a period of at least five (5)
calendar days from receipt of the notice to give the
21
employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather
data and evidence, and decide on the defenses they
will raise against the complaint. Moreover, in order to
enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that
will serve as basis for the charge against the
employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or
which among the grounds under Art. 282 is being
charged against the employees.
(2) After serving the first notice, the employers should
schedule and conduct
a hearing or conference wherein the employees will
be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present
evidence in support of their defenses; and (3) rebut
the evidence presented against them by the
management. During the hearing or conference, the
employees are given the chance to defend themselves
personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity
to come to an amicable settlement.
(3) After determining that termination of employment
is justified, the employers shall serve the employees
a written notice of termination indicating that: (1)
all circumstances involving the charge against the
employees have been considered; and (2) grounds
have been established to justify the severance of their
employment. (Emphasis in original.)
Here, Mr. Schulz's and Ms. Woodward's letters dated
December 19, 1995 and March 14, 1996, respectively,
are not one of the valid twin notices. Neither identified
the alleged acts that CMI now claims as bases for
Basso's termination. Ms. Woodward's letter even
stressed that the original plan was to remove Basso as
General Manager but with an offer to make him
consultant. It was inconsistent of CMI to declare Basso
as unworthy of its trust and confidence and, in the
same breath, offer him the position of consultant. As
the Court of Appeals pointed out:
But mark well that Basso was clearly notified that the
sole ground for his dismissal was the exercise of the
termination at will clause in the employment contract.
The alleged loss of trust and confidence claimed by
Continental appears to be a mere afterthought
belatedly trotted out to save the day.90
Basso, reinstatement is no longer possible since he has
already passed away. Thus, Basso's separation pay
with full backwages shall be paid to his heirs.
As to the computation of backwages, we agree with
CMI that Basso was entitled to backwages only up to
the time he reached 65 years old, the compulsory
retirement age under the law.92 This is our consistent
ruling.93 When Basso was illegally dismissed on
January 31, 1996, he was already 58 years old.94 He
turned 65 years old on October 2, 2002. Since
backwages are granted on grounds of equity for
earnings lost by an employee due to his illegal
dismissal,95 Basso was entitled to backwages only for
the period he could have worked had he not been
illegally dismissed, i.e. from January 31, 1996 to
October 2, 2002.
WHEREFORE, premises considered, the Decision of
the Court of Appeals dated May 23, 2006 and
Resolution dated June 19, 2007 in the consolidated
cases CA-G.R. SP No. 83938 and CA-G.R. SP No. 84281
are AFFIRMED, with MODIFICATION as to the award
of backwages. Petitioner Continental Micronesia, Inc.
is hereby ordered to pay Respondent Joseph Basso's
heirs: 1) separation pay equivalent to one (1) month
pay for every year of service, and 2) full backwages
from January 31, 1996, the date of his illegal dismissal,
to October 2, 2002, the date of his compulsory
retirement age.
SO ORDERED.chanroblesvirtuallawlibrary
Velasco, Jr., (Chairperson), Peralta, Villarama, Jr.,
and Perez,*JJ., concur.
Endnotes:
*Designated as Acting Member in view of the leave of
absence of Hon. Bienvenido L. Reyes, per Special Order
No. 2084 dated June 29, 2015.
1Rollo, pp. 31-125.
2 Penned by Associate Justice Roberto A. Barrios with
Associate Justices Mario L. Guariña III and Santiago
Javier Ranada concurring, id. at 141-156.
3Id. at 26-27.
4Id. at 697-707.

Basso is entitled to separation pay and full 5Id. at 171.

backwages.
6Id. at 391.
Under Article 279 of the Labor Code, an employee who
is unjustly dismissed from work shall be entitled 7Id. at 391-392.
to reinstatement without loss of eniority rights
and other privileges, and to his full backwages, 8Id. at 266-269.
inclusive of allowances and to his other benefits or
their monetary equivalent omputed from the time his 9Id. at 142, 392 & 520.
compensation was withheld up to the time of actual
reinstatement. 10Id. at 409.

Where reinstatement is no longer viable as an option, 11Id. at 410-41.

separation pay equivalent to one (1) month salary for
every year of service should be awarded as an 12Id. at 412.
alternative. The payment of separation pay is in
addition to payment of backwages.91 In the case of 13Id. at 413-414.

22
 97642, August 29, 1997, 278 SCRA 312, 323
14Id. at 393. citing Marshall-Wells Co. v. Elser & Co., 46 Phil. 70
(1924).
15Id. at 170-174.
45See Raytheon International. Inc. v. Rouzie, Jr., G.R. No.
16Id. at 180-190. 162894, February 26, 2008, 546 SCRA 555, 563 citing
RUBEN E. AGPALO, CONFLICT OF LAWS (PRIVATE
17Id. at 210-217. INTERNATIONAL LAW), 2004 Ed., p. 491.

18Id. at 516-544. 46Bankof America, NT&SA v. Court of Appeals, G.R. No.

120135, March 31, 2003, 400 SCRA 156, 169.
19Id.at 525-526.
47Saudi Arabiah Airlines v. Court of Appeals, supra note
20Id. at 526. 39 at 489-490.

21Id. at 537-538. 48Hasegawa v. Kitamura, supra note 40 at 273.

22Id. at 527. 49Id.

23Id. at 697-707. 50Rollo, pp. 72-73.

24Id. at 706. 51Supra note 39 at 490-491.

25Id. at 704. 52The lex fori — the law of the forum - is particularly
important because, as we have seen earlier, matters of
26Id.at 704-706. "procedure" not going to the substance of the claim
involved are governed by it; and because the lex
27Id. at 669-684. fori applies whenever the content of the otherwise
applicable foreign law is excluded from application in
28Id. at 685-695. a given case for the reason that it falls under one of the
exceptions to the applications of foreign law.
29Id. at 709-710.
53 G.R. No. 140047, July 13, 2004, 434 SCRA 202.
30Id. at 712-713.
54Id.
at 215, citing EDGARDO L. PARAS, PHILIPPINE
31Id. at 714-734. CONFLICT OF LAWS, (6th Ed., 1984), p. 414.

32Id. at 783-825. 55Id.,citing JOV1TO R. SALONGA, PRIVATE

INTERNATIONAL LAW, (1995 Ed.), p. 356.
33Id. at 145.
56G.R. No. 133876, December 29, 1999, 321 SCRA 659,
34Id. at 9-25. 674.

35Id. at 23. 57Id. at 675.

36Id. at 20. 58See Archbuild Masters and Construction, Inc. v. NLRC,

G.R. No. 108142, December 26, 1995, 251 SCRA 483.
37CMI's Motion for Reconsideration dated June 9,
2006, rollo, pp. 924-991; Basso's Motion for 59Wildvalley
Shipping Co., Ltd. v. Court of Appeals, G.R.
Reconsideration dated June 13, 2006, rollo, pp. 992- No. 119602, October 6, 2000, 342 SCRA 213, 219.
1005.
60G.R. No. 130866, September 16, 1998, 295 SCRA
38Id. at 26-28. 494.

39SaudiArabian Airlines v. Court of Appeals, G.R. No. 61Garcia v. NLRC, G.R. No. 147427, February 7, 2005,
122191, October 8, 1998, 297 SCRA 469, 484. 450 SCRA 535, 547.

40G.R. No. 149177, November 23, 2007, 538 SCRA 261, 62G.R. No. 150092, September 27, 2002, 390 SCRA
272-273. 201.

41JOVITO R. SALONGA, PRIVATE INTERNATIONAL 63Id. at 208-209.

LAW, (1995 Ed.), p. 111.
64Univac Development, Inc. v. Soriano, G.R. No. 182072,
42Laresma v. Abellana, G.R. No. 140973, November 11, June 19, 2013, 699 SCRA 88, 98.
2004, 442 SCRA 156, 168.
65Pepsi-Cola
Products Philippines, Inc. v. Molon, G.R. No.
43Atienza v. People, G.R. No. 188694, February 12, 175002, February 18, 2013, 691 SCRA 113, 125.
2014, 716 SCRA 84, 104.
66PLDT v. Tolentino, G.R. No. 143 171, September 21,
44Avon Insurance PLC v. Court of Appeals, G.R. No. 2004, 438 SCRA 555, 560.

23
 xxx xxx xxx
67 G.R. No. 176671, June 20, 2012, 674 SCRA 162, 175
citing Rubia v. NLRC, Fourth Division, G.R. No. 178621, In the absence of a retirement plan or agreement
July 26, 2010, 625 SCRA 49 and Sunrise Holiday providing for retirement benefits of employees in the
Concepts, Inc. v. Arugay, G.R. No. 189457, April 13, establishment, an employee upon reaching the age of
2011, 648 SCRA 785. sixty (60) years or more, but not beyond sixty five (65)
years which is hereby declared the compulsory
68MidasTouch Food Corporation v. NLRC, G.R. No. retirement age, who has served at least five (5) years
111639, July 29, 1996, 259 SCRA 652, 660. in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one
69Del Val v. NLRC, G.R. No. 121806, September 25, half (1/2) month salary for every year of service, a
1998, 296 SCRA 283, 289. fraction of at least six (6) months being considered as
one whole year.
70Rollo, p. 220.
93See The New Philippine Skylanders, Inc. v. Dakila, G.R.
71Id. at 98. No. 199547, September 24, 2012, 681 SCRA
658; Jaculbe v. Silliman University, G.R. No. 156934,
72Id. at 220. March 16, 2007, 518 SCRA 445; Intercontinental
Broadcasting Corporation v. Benedicto, G.R. No.
73Id. at 92, 220 & 273. 152843, July 20, 2006, 495 SCRA 561.

74Id. at 94. 94Based on Joseph Basso's Special Resident Retiree's

Visa, issued July 11, 1989, he was born on October 2,
75Id. at 96. 1937, rollo, pp. 602-603.

76Id. at 425. 95Espejov. NLRC, G.R. No. 112678, March 29, 1996, 255
SCRA 430 citing Torillo v. Leogardo Jr., G.R. No. 77205,
77Id. May 27, 1991, 197 SCRA 471.

78Id. at 298.

79Id. at 386-390. G.R. No. 205703, March 07, 2016

80Id. at 413-414. INDUSTRIAL PERSONNEL & MANAGEMENT

SERVICES, INC. (IPAMS), SNC LAVALIN ENGINEERS
81Id. at 430-432. & CONTRACTORS, INC. AND ANGELITO C.
HERNANDEZ, Petitioners, v. JOSE G. DE VERA AND
82Telephone numbers 816-0443, 819-5738 and 810- ALBERTO B. ARRIOLA, Respondents.
8644, id. at 431.

83Id.
DECISION

84Id. MENDOZA, J.:

at 100-101.

85Id. at 459-460. When can a foreign law govern an overseas

employment contract? This is the fervent question that
86Id. at 460. the Court shall resolve, once and for all.

87Id. at 162. This petition for review on certiorari seeks to reverse

and set aside the January 24, 2013 Decision1 of the
88Lepanto Consolidated Mining Company v. Dumapis, Court of Appeals (CA) in CA-G.R. SP No. 118869, which
G.R. No. 163210, August 13, 2008, 562 SCRA 103, 120. modified the November 30, 2010 Decision2 of the
National Labor Relations Commission (NLRC) and its
89G.R. No. 166208, June 29, 2007, 526 SCRA 116, 125- February 2, 2011 Resolution,3 in NLRC LAC Case No.
126. 08-000572-10/NLRC Case No. NCR 09-13563-09, a
case for illegal termination of an Overseas Filipino
90Rollo, p. 19. Worker (OFW).

91GoldenAce Builders v. Talde, G.R. No. 187200, May 5, The Facts

2010, 620 SCRA 283, 288-289 citing Macasero v.
Southern Industrial Gases Philippines, G.R. No. 178524,
January 30, 2009, 577 SCRA 500.
92Art. 287 of the Labor Code, as amended by Republic
Act No. 7641 provides:chanRoblesvirtualLawlibrary
Art. 287. Retirement. Any employee may be retired
upon reaching the retirement age established in the
collective bargaining agreement or other applicable
employment contract.
Petitioner Industrial Personnel & Management
Services, Inc. (IPAMS) is a local placement agency duly
organized and existing under Philippine laws, with
petitioner Angelito C. Hernandez as its president and
managing director. Petitioner SNC Lavalin Engineers &
Contractors, Inc. (SNC-Lavalin) is the principal of
IPAMS, a Canadian company with business interests in
several countries. On the other hand, respondent
Alberto Arriola (Arriola) is a licensed general surgeon
in the Philippines.4

24

Employee's Position
Arriola was offered by SNC-Lavalin, through its
letter,5 dated May 1, 2008, the position of Safety
Officer in its Ambatovy Project site in Madagascar. The
position offered had a rate of CA$32.00 per hour for
forty (40) hours a week with overtime pay in excess of
forty (40) hours. It was for a period of nineteen (19)
months starting from June 9, 2008 to December 31,
2009.
Arriola was then hired by SNC-Lavalin, through its
local manning agency, IPAMS, and his overseas
employment contract was processed with the
Philippine Overseas Employment Agency (POEA)6 In a
letter of understanding,7 dated June 5, 2008, SNC-
Lavalin confirmed Arriola's assignment in the
Ambatovy Project. According to Arriola, he signed the
contract of employment in the Philippines.8 On June 9,
2008, Arriola started working in Madagascar.
After three months, Arriola received a notice of pre-
termination of employment,9 dated September 9,
2009, from SNC-Lavalin. It stated that his employment
would be pre-terminated effective September 11,
2009 due to diminishing workload in the area of his
expertise and the unavailability of alternative
assignments. Consequently, on September 15, 2009,
Arriola was repatriated. SNC-Lavalin deposited in
Arriola's bank account his pay amounting to Two
Thousand Six Hundred Thirty Six Dollars and Eight
Centavos (CA$2,636.80), based on Canadian labor law.
Aggrieved, Arriola filed a complaint against the
petitioners for illegal dismissal and non-payment of
overtime pay, vacation leave and sick leave pay before
the Labor Arbiter (LA). He claimed that SNC-Lavalin
still owed him unpaid salaries equivalent to the three-
month unexpired portion of his contract, amounting
to, more or less, One Million Sixty-Two Thousand Nine
Hundred Thirty-Six Pesos (P1,062,936.00). He
asserted that SNC-Lavalin never offered any valid
reason for his early termination and that he was not
given sufficient notice regarding the same. Arriola also
insisted that the petitioners must prove the
applicability of Canadian law before the same could be
applied to his employment contract.
Employer's Position
The petitioners denied the charge of illegal dismissal
against them. They claimed that SNC-Lavalin was
greatly affected by the global financial crises during
the latter part of 2008. The economy of Madagascar,
where SNC-Lavalin had business sites, also slowed
down. As proof of its looming financial standing, SNC-
Lavalin presented a copy of a news item in the
Financial Post,10 dated March 5, 2009, showing the
decline of the value of its stocks. Thus, it had no choice
but to minimize its expenditures and operational
expenses. It re-organized its Health and Safety
Department at the Ambatovy Project site and Arriola
was one of those affected.11
The petitioners also invoked EDI-Staffbuilders
International, Inc. v. NLRC12 (EDI-Staffbuilders),
pointing out that particular labor laws of a foreign
country incorporated in a contract freely entered into
between an OFW and a foreign employer through the
latter's agent was valid. In the present case, as all of
Arriola's employment documents were processed in
Canada, not to mention that SNC-Lavalin's office was
in Ontario, the principle of lex loci celebrationis was
applicable. Thus, the petitioners insisted that Canadian
laws governed the contract.
The petitioners continued that the pre-termination of
Arriola's contract was valid for being consistent with
the provisions of both the Expatriate Policy and laws
of Canada. The said foreign law did not require any
ground for early termination of employment, and the
only requirement was the written notice of
termination. Even assuming that Philippine laws
should apply, Arriola would still be validly dismissed
because domestic law recognized retrenchment and
redundancy as legal grounds for termination.
In their Rejoinder,13 the petitioners presented a copy
of the Employment Standards Act (ESA) of Ontario,
which was duly authenticated by the Canadian
authorities and certified by the Philippine Embassy.
The LA Ruling
In a Decision,14 dated May 31, 2010, the LA dismissed
Arriola's complaint for lack of merit. The LA ruled that
the rights and obligations among and between the
OFW, the local recruiter/agent, and the foreign
employer/principal were governed by the
employment contract pursuant to the EDI-
Staffbuilders case. Thus, the provisions on termination
of employment found in the ESA, a foreign law which
governed Arriola's employment contract, were
applied. Given that SNC-Lavalin was able to produce
the duly authenticated ESA, the LA opined that there
was no other conclusion but to uphold the validity of
Arriola's dismissal based on Canadian law. The fallo of
the LA decision reads:
chanRoblesvirtualLawlibrary
WHEREFORE, all the foregoing premises being
considered, judgment is hereby rendered dismissing
the complaint for lack of merit.
SO ORDERED.15ChanRoblesVirtualawlibrary
Aggrieved, Arriola elevated the LA decision before the
NLRC.
The NLRC Ruling
In its decision, dated November 30, 2010, the NLRC
reversed the LA decision and ruled that Arriola was
illegally dismissed by the petitioners. Citing PNB v.
Cabansag,16 the NLRC stated that whether employed
locally or overseas, all Filipino workers enjoyed the
protective mantle of Philippine labor and social
legislation, contract stipulations to the contrary
notwithstanding. Thus, the Labor Code of the
Philippines and Republic Act (R.A.) No. 8042, or the
Migrant Workers Act, as amended, should be applied.
Moreover, the NLRC added that the overseas
employment contract of Arriola was processed in the
POEA.
Applying the Philippine laws, the NLRC found that
there was no substantial evidence presented by the
petitioners to show any just or authorized cause to
terminate Arriola. The ground of financial losses by
SNC-Lavalin was not supported by sufficient and
25
credible evidence. The NLRC concluded that, for being
illegally dismissed, Arriola should be awarded
CA$81,920.00 representing sixteen (16) months of
Arriola's purported unpaid salary, pursuant to
the Serrano v. Gallant17 doctrine. The decretal portion
of the NLRC decision states:
chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, judgment is
hereby rendered finding complainant-appellant to
have been illegally dismissed. Respondents-appellees
are hereby ordered to pay complainant-appellant the
amount of CA$81,920.00, or its Philippine Peso
equivalent prevailing at the time of payment.
Accordingly, the decision of the Labor Arbiter dated
May 31, 2010 is hereby VACATED and SET ASIDE.
SO ORDERED.18ChanRoblesVirtualawlibrary
The petitioners moved for reconsideration, but their
motion was denied by the NLRC in its resolution, dated
February 2, 2011.
Undaunted, the petitioners filed a petition
for certiorari before the CA arguing that it should be
the ESA, or the Ontario labor law, that should be
applied in Arriola's employment contract. No
temporary restraining order, however, was issued by
the CA.
The Execution Proceedings
In the meantime, execution proceedings were
commenced before the LA by Arriola. The LA granted
the motion for execution in the Order,19 dated August
8, 2011.
The petitioners appealed the execution order to the
NLRC. In its Decision,20 dated May 31, 2012, the NLRC
corrected the decretal portion of its November 30,
2010 decision. It decreased the award of backpay in
the amount of CA$26,880.00 or equivalent only to
three (3) months and three (3) weeks pay based on
70-hours per week workload. The NLRC found that
when Arriola was dismissed on September 9, 2009, he
only had three (3) months and three (3) weeks or until
December 31, 2009 remaining under his employment
contract.
Still not satisfied with the decreased award, IPAMS
filed a separate petition for certiorari before the CA. In
its decision, dated July 25, 2013, the CA affirmed the
decrease in Arriola's backpay because the unpaid
period in his contract was just three (3) months and
three (3) weeks.
Unperturbed, IPAMS appealed before the Court and
the case was docketed as G.R. No. 212031. The appeal,
however, was dismissed outright by the Court in its
resolution, dated August 8, 2014, because it was
belatedly filed and it did not comply with Sections 4
and 5 of Rule 7 of the Rules of Court. Hence, it was
settled in the execution proceedings that the award of
backpay to Arriola should only amount to three (3)
months and three (3) weeks of his pay.
The CA Ruling
Returning to the principal case of illegal dismissal, in
its assailed January 24, 2013 decision, the CA affirmed
that Arriola was illegally dismissed by the petitioners.
The CA explained that even though an authenticated
copy of the ESA was submitted, it did not mean that
the said foreign law automatically applied in this case.
Although parties were free to establish stipulations in
their contracts, the same must remain consistent with
law, morals, good custom, public order or public
policy. The appellate court wrote that the ESA allowed
an employer to disregard the required notice of
termination by simply giving the employee a
severance pay. The ESA could not be made to apply in
this case for being contrary to our Constitution,
specifically on the right of due process. Thus, the CA
opined that our labor laws should find application.
As the petitioners neither complied with the twin
notice-rule nor offered any just or authorized cause
for his termination under the Labor Code, the CA held
that Arriola's dismissal was illegal. Accordingly, it
pronounced that Arriola was entitled to his salary for
the unexpired portion of his contract which is three
(3) months and three (3) weeks salary. It, however,
decreased the award of backpay to Arriola because the
NLRC made a wrong calculation. Based on his
employment contract, the backpay of Arriola should
only be computed on a 40-hour per week workload, or
in the amount of CA$19,200.00. The CA disposed the
case in this wise:
chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing premises, the
petition is PARTIALLY GRANTED. The assailed Order
of the National Labor Relations Commission in NLRC
LAC No. 08-000572-10/NLRC Case No. NCR 09-13563-
09 is MODIFIED in that private respondent is only
entitled to a monetary judgment equivalent to his
unpaid salaries in the amount of CA$19,200.00 or its
Philippine Peso equivalent.
SO ORDERED.21ChanRoblesVirtualawlibrary
Hence, this petition, anchored on the following
ISSUES
I
WHETHER OR NOT RESPONDENT ARRIOLA WAS
VALIDLY DISMISSED PURSUANT TO THE
EMPLOYMENT CONTRACT.
II
GRANTING THAT THERE WAS ILLEGAL DISMISSAL
IN THE CASE AT BAR, WHETHER OR NOT THE SIX-
WEEK ON, TWO-WEEK OFF SCHEDULE SHOULD BE
USED IN THE COMPUTATION OF ANY MONETARY
AWARD.
III
GRANTING THAT THERE WAS ILLEGAL DISMISSAL,
WHETHER OR NOT THE AMOUNT BEING CLAIMED
BY RESPONDENTS HAD ALREADY BEEN SATISFIED,
OR AT THE VERY LEAST, WHETHER OR NOT THE
AMOUNT OF CA$2,636.80 SHOULD BE DEDUCTED
FROM THE MONETARY
AWARD.22ChanRoblesVirtualawlibrary
The petitioners argue that the rights and obligations of
the OFW, the local recruiter, and the foreign employer
are governed by the employment contract, citing EDI-
Staffbuilders; that the terms and conditions of Arriola's
employment are embodied in the Expatriate Policy,
Ambatovy Project - Site, Long Term, hence, the laws of
Canada must be applied; that the ESA, or the Ontario
26
labor law, does not require any ground for the early
termination of employment and it permits the
termination without any notice provided that a
severance pay is given; that the ESA was duly
authenticated by the Canadian authorities and
certified by the Philippine Embassy; that the NLRC
Sixth Division exhibited bias and bad faith when it
made a wrong computation on the award of backpay;
and that, assuming there was illegal dismissal, the
CA$2,636.80, earlier paid to Arriola, and his home
leaves should be deducted from the award of backpay.
In his Comment,23 Arriola countered that foreign laws
could not apply to employment contracts if they were
contrary to law, morals, good customs, public order or
public policy, invoking Pakistan International Airlines
Corporation v. Ople (Pakistan International);24 that the
ESA was not applicable because it was contrary to his
constitutional right to due process; that the petitioners
failed to substantiate an authorized cause to justify his
dismissal under Philippine labor law; and that the
petitioners could not anymore claim a deduction of
CA$2,636.80 from the award of backpay because it
was raised for the first time on appeal.
In their Reply,25 the petitioners asserted that R.A. No.
8042 recognized the applicability of foreign laws on
labor contracts; that the Pakistan International case
was superseded by EDI-Staffbuilders and other
subsequent cases; and that SNC-Lavalin suffering
financial losses was an authorized cause to terminate
Arriola's employment.
In his Memorandum,26 Arriola asserted that his
employment contract was executed in the Philippines
and that the alleged authorized cause of financial
losses by the petitioners was not substantiated by
evidence.
In their Consolidated Memorandum,27 the petitioners
reiterated that the ESA was applicable in the present
case and that recent jurisprudence recognized that the
parties could agree on the applicability of foreign laws
in their labor contracts.
The Court's Ruling
The petition lacks merit.
Application of foreign laws with labor contracts
At present, Filipino laborers, whether skilled or
professional, are enticed to depart from the
motherland in search of greener pastures. There is a
distressing reality that the offers of employment
abroad are more lucrative than those found in our
own soils. To reap the promises of the foreign dream,
our unsung heroes must endure homesickness,
solitude, discrimination, mental and emotional
struggle, at times, physical turmoil, and, worse, death.
On the other side of the table is the growing number of
foreign employers attracted in hiring Filipino workers
because of their reasonable compensations and
globally-competitive skills and qualifications. Between
the dominant foreign employers and the vulnerable
and desperate OFWs, however, there is an inescapable
truth that the latter are in need of greater safeguard
and protection.
In order to afford the full protection of labor to our
OFWs, the State has vigorously enacted laws, adopted
regulations and policies, and established agencies to
ensure that their needs are satisfied and that they
continue to work in a humane living environment
outside of the country. Despite these efforts, there are
still issues left unsolved in the realm of overseas
employment. One existing question is posed before the
Court -when should an overseas labor contract be
governed by a foreign law? To answer this burning
query, a review of the relevant laws and jurisprudence
is warranted.
R.A. No. 8042, or the Migrant Workers Act, was
enacted to institute the policies on overseas
employment and to establish a higher standard of
protection and promotion of the welfare of migrant
workers.28 It emphasized that while recognizing the
significant contribution of Filipino migrant workers to
the national economy through their foreign exchange
remittances, the State does not promote overseas
employment as a means to sustain economic growth
and achieve national development.29 Although it
acknowledged claims arising out of law or contract
involving Filipino workers,30 it does not categorically
provide that foreign laws are absolutely and
automatically applicable in overseas employment
contracts.
The issue of applying foreign laws to labor contracts
was initially raised before the Court in Pakistan
International. It was stated in the labor contract
therein (1) that it would be governed by the laws of
Pakistan, (2) that the employer have the right to
terminate the employee at any time, and (3) that the
one-month advance notice in terminating the
employment could be dispensed with by paying the
employee an equivalent one-month salary. Therein,
the Court elaborated on the parties' right to stipulate
in labor contracts, to wit:
chanRoblesvirtualLawlibrary
A contract freely entered into should, of course, be
respected, as PIA argues, since a contract is the law
between the parties. The principle of party autonomy
in contracts is not, however, an absolute principle. The
rule in Article 1306, of our Civil Code is that the
contracting parties may establish such stipulations as
they may deem convenient, "provided they are not
contrary to law, morals, good customs, public
order or public policy." Thus, counterbalancing the
principle of autonomy of contracting parties is the
equally general rule that provisions of applicable law,
especially provisions relating to matters affected with
public policy, are deemed written into the contract.
Put a little differently, the governing principle is that
parties may not contract away applicable provisions of
law especially peremptory provisions dealing with
matters heavily impressed with public interest. The
law relating to labor and employment is clearly
such an area and parties are not at liberty to
insulate themselves and their relationships from
the impact of labor laws and regulations by simply
contracting with each other. x x x31
[Emphases Supplied]
In that case, the Court held that the labor relationship
between OFW and the foreign employer is "much
affected with public interest and that the otherwise
applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some
other law to govern their relationship."32 Thus, the
27
Court applied the Philippine laws, instead of the
Pakistan laws. It was also held that the provision in the
employment contract, where the employer could
terminate the employee at any time for any ground
and it could even disregard the notice of termination,
violates the employee's right to security of tenure
under Articles 280 and 281 of the Labor Code.
In EDI-Staffbuilders, the case heavily relied on by the
petitioners, it was reiterated that, "[i]n formulating the
contract, the parties may establish such stipulations,
clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law,
morals, good customs, public order, or public
policy."33 In that case, the overseas contract
specifically stated that Saudi Labor Laws would
govern matters not provided for in the contract. The
employer, however, failed to prove the said foreign
law, hence, the doctrine of processual presumption
came into play and the Philippine labor laws were
applied. Consequently, the Court did not discuss any
longer whether the Saudi labor laws were contrary to
Philippine labor laws.
The case of Becmen Service Exporter and Promotion,
Inc. v. Spouses Cuaresma,34 though not an illegal
termination case, elucidated on the effect of foreign
laws on employment. It involved a complaint for
insurance benefits and damages arising from the death
of a Filipina nurse from Saudi Arabia. It was initially
found therein that there was no law in Saudi Arabia
that provided for insurance arising from labor
accidents. Nevertheless, the Court concluded that the
employer and the recruiter in that case abandoned
their legal, moral and social obligation to assist the
victim's family in obtaining justice for her death, and
so her family was awarded P5,000,000.00 for moral
and exemplary damages.
In ATCI Overseas Corporation v. Echin35 (ATCI
Overseas), the private recruitment agency invoked the
defense that the foreign employer was immune from
suit and that it did not sign any document agreeing to
be held jointly and solidarily liable. Such defense,
however, was rejected because R.A. No. 8042 precisely
afforded the OFWs with a recourse against the local
agency and the foreign employer to assure them of an
immediate and sufficient payment of what was due.
Similar to EDI-Staffbuilders, the local agency therein
failed to prove the Kuwaiti law specified in the labor
contract, pursuant to Sections 24 and 25 of Rule 132 of
the Revised Rules of Court.
Also, in the recent case of Sameer Overseas Placement
Agency, Inc. v. Cabiles36 (Sameer Overseas), it was
declared that the security of tenure for labor was
guaranteed by our Constitution and employees were
not stripped of the same when they moved to work in
other jurisdictions. Citing PCL Shipping Phils., Inc. v.
NLRC37 (PCL Shipping), the Court held that the
principle of lex loci contractus (the law of the place
where the contract is made) governed in this
jurisdiction. As it was established therein that the
overseas labor contract was executed in the
Philippines, the Labor Code and the fundamental
procedural rights were observed. It must be noted that
no foreign law was specified in the employment
contracts in both cases.
Lastly, in Saudi Arabian Airlines (Saudia) v.
Rebesencio38, the employer therein asserted the
doctrine of forum non conveniens because the
overseas employment contracts required the
application of the laws of Saudi Arabia, and so, the
Philippine courts were not in a position to hear the
case. In striking down such argument, the Court held
that while a Philippine tribunal was called upon to
respect the parties' choice of governing law, such
respect must not be so permissive as to lose sight of
considerations of law, morals, good customs, public
order, or public policy that underlie the contract
central to the controversy. As the dispute in that case
related to the illegal termination of the employees due
to their pregnancy, then it involved a matter of public
interest and public policy. Thus, it was ruled that
Philippine laws properly found application and that
Philippine tribunals could assume jurisdiction.
Based on the foregoing, the general rule is that
Philippine laws apply even to overseas employment
contracts. This rule is rooted in the constitutional
provision of Section 3, Article XIII that the State shall
afford full protection to labor, whether local or
overseas. Hence, even if the OFW has his employment
abroad, it does not strip him of his rights to security of
tenure, humane conditions of work and a living wage
under our Constitution.39
As an exception, the parties may agree that a foreign
law shall govern the employment contract. A synthesis
of the existing laws and jurisprudence reveals that this
exception is subject to the following requisites:
chanRoblesvirtualLawlibrary
1. That it is expressly stipulated in the overseas
employment contract that a specific foreign
law shall govern;
2. That the foreign law invoked must be proven
before the courts pursuant to the Philippine
rules on evidence;
3. That the foreign law stipulated in the overseas
employment contract must not be contrary to
law, morals, good customs, public order, or
public policy of the Philippines; and
4. That the overseas employment contract must
be processed through the POEA.
The Court is of the view that these four (4) requisites
must be complied with before the employer could
invoke the applicability of a foreign law to an overseas
employment contract. With these requisites, the State
would be able to abide by its constitutional obligation
to ensure that the rights and well-being of our OFWs
are fully protected. These conditions would also
invigorate the policy under R.A. No. 8042 that the
State shall, at all times, uphold the dignity of its
citizens whether in country or overseas, in general,
and the Filipino migrant workers, in
particular.40 Further, these strict terms are pursuant to
the jurisprudential doctrine that "parties may not
contract away applicable provisions of law especially
peremptory provisions dealing with matters heavily
impressed with public interest,"41 such as laws
relating to labor. At the same time, foreign employers
are not at all helpless to apply their own laws to
overseas employment contracts provided that they
faithfully comply with these requisites.
28

If the first requisite is absent, or that no foreign law
was expressly stipulated in the employment contract
which was executed in the Philippines, then the
domestic labor laws shall apply in accordance with the
principle of lex loci contractus. This is based on the
cases of Sameer Overseas and PCL Shipping.
If the second requisite is lacking, or that the foreign
law was not proven pursuant to Sections 24 and 25 of
Rule 132 of the Revised Rules of Court, then the
international law doctrine of processual presumption
operates. The said doctrine declares that "[w]here a
foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that foreign law is the
same as ours."42 This was observed in the cases of EDI-
Staffbuilders and ATCI Overseas.
If the third requisite is not met, or that the foreign law
stipulated is contrary to law, morals, good customs,
public order or public policy, then Philippine laws
govern. This finds legal bases in the Civil Code,
specifically: (1) Article 17, which provides that laws
which have, for their object, public order, public policy
and good customs shall not be rendered ineffective by
laws of a foreign country; and (2) Article 1306, which
states that the stipulations, clauses, terms and
conditions in a contract must not be contrary to law,
morals, good customs, public order, or public policy.
The said doctrine was applied in the case of Pakistan
International.
Finally, if the fourth requisite is missing, or that the
overseas employment contract was not processed
through the POEA, then Article 18 of the Labor Code is
violated. Article 18 provides that no employer may
hire a Filipino worker for overseas employment
except through the boards and entities authorized by
the Secretary of Labor. In relation thereto, Section 4 of
R.A. No. 8042, as amended, declares that the State shall
only allow the deployment of overseas Filipino
workers in countries where the rights of Filipino
migrant workers are protected. Thus, the POEA,
through the assistance of the Department of Foreign
Affairs, reviews and checks whether the countries
have existing labor and social laws protecting the
rights of workers, including migrant workers.43 Unless
processed through the POEA, the State has no effective
means of assessing the suitability of the foreign laws
to our migrant workers. Thus, an overseas
employment contract that was not scrutinized by the
POEA definitely cannot be invoked as it is an
unexamined foreign law.
In other words, lacking any one of the four requisites
would invalidate the application of the foreign law,
and the Philippine law shall govern the overseas
employment contract.
As the requisites of the applicability of foreign laws in
overseas labor contract have been settled, the Court
can now discuss the merits of the case at bench.
A judicious scrutiny of the records of the case
demonstrates that the petitioners were able to
observe the second requisite, or that the foreign law
must be proven before the court pursuant to the
Philippine rules on evidence. The petitioners were
able to present the ESA, duly authenticated by the
Canadian authorities and certified by the Philippine
Embassy, before the LA. The fourth requisite was also
followed because Arriola's employment contract was
processed through the POEA.44
Unfortunately for the petitioners, those were the only
requisites that they complied with. As correctly held
by the CA, even though an authenticated copy of the
ESA was submitted, it did not mean that said foreign
law could be automatically applied to this case. The
petitioners miserably failed to adhere to the two other
requisites, which shall be discussed in seratim.
The foreign law was not expressly specified in the
employment contract
The petitioners failed to comply with the first requisite
because no foreign law was expressly stipulated in the
overseas employment contract with Arriola. In its
pleadings, the petitioners did not directly cite any
specific provision or stipulation in the said labor
contract which indicated the applicability of the
Canadian labor laws or the ESA. They failed to show on
the face of the contract that a foreign law was agreed
upon by the parties. Rather, they simply asserted that
the terms and conditions of Arriola's employment
were embodied in the Expatriate Policy, Ambatovy
Project - Site, Long Term.45 Then, they emphasized
provision 8.20 therein, regarding interpretation of the
contract, which provides that said policy would be
governed and construed with the laws of the country
where the applicable SNC-Lavalin, Inc. office was
located.46 Because of this provision, the petitioners
insisted that the laws of Canada, not of Madagascar or
the Philippines, should apply. Then, they finally
referred to the ESA.
It is apparent that the petitioners were simply
attempting to stretch the overseas employment
contract of Arriola, by implication, in order that the
alleged foreign law would apply. To sustain such
argument would allow any foreign employer to
improperly invoke a foreign law even if it is not
anymore reasonably contemplated by the parties to
control the overseas employment. The OFW, who is
susceptible by his desire and desperation to work
abroad, would blindly sign the labor contract even
though it is not clearly established on its face which
state law shall apply. Thus, a better rule would be to
obligate the foreign employer to expressly declare at
the onset of the labor contract that a foreign law shall
govern it. In that manner, the OFW would be informed
of the applicable law before signing the contract.
Further, it was shown that the overseas labor contract
was executed by Arriola at his residence in Batangas
and it was processed at the POEA on May 26,
2008.47 Considering that no foreign law was specified
in the contract and the same was executed in the
Philippines, the doctrine of lex loci
celebrationis applies and the Philippine laws shall
govern the overseas employment of Arriola.
The foreign law invoked is contrary to the Constitution
and the Labor Code
Granting arguendo that the labor contract expressly
stipulated the applicability of Canadian law, still,
Arriola's employment cannot be governed by such
foreign law because the third requisite is not satisfied.
A perusal of the ESA will show that some of its
29
provisions are contrary to the Constitution and the
labor laws of the Philippines.
First, the ESA does not require any ground for the
early termination of employment.48 Article 54 thereof
only provides that no employer should terminate the
employment of an employee unless a written notice
had been given in advance.49 Necessarily, the employer
can dismiss any employee for any ground it so desired.
At its own pleasure, the foreign employer is endowed
with the absolute power to end the employment of an
employee even on the most whimsical grounds.
Second, the ESA allows the employer to dispense with
the prior notice of termination to an employee. Article
65(4) thereof indicated that the employer could
terminate the employment without notice by simply
paying the employee a severance pay computed on the
basis of the period within which the notice should
have been given.50 The employee under the ESA could
be immediately dismissed without giving him the
opportunity to explain and defend himself.
The provisions of the ESA are patently inconsistent
with the right to security of tenure. Both the
Constitution51 and the Labor Code52 provide that this
right is available to any employee. In a host of cases,
the Court has upheld the employee's right to security
of tenure in the face of oppressive management
behavior and management prerogative. Security of
tenure is a right which cannot be denied on mere
speculation of any unclear and nebulous basis.53
Not only do these provisions collide with the right to
security of tenure, but they also deprive the employee
of his constitutional right to due process by denying
him of any notice of termination and the opportunity
to be heard.54 Glaringly, these disadvantageous
provisions under the ESA produce the same evils
which the Court vigorously sought to prevent in the
cases of Pakistan International and Sameer Overseas.
Thus, the Court concurs with the CA that the ESA is not
applicable in this case as it is against our fundamental
and statutory laws.
In fine, as the petitioners failed to meet all the four (4)
requisites on the applicability of a foreign law, then
the Philippine labor laws must govern the overseas
employment contract of Arriola.
No authorized cause for dismissal was proven
Article 279 of our Labor Code has construed security
of tenure to mean that the employer shall not
terminate the services of an employee except for a just
cause or when authorized by law.55 Concomitant to the
employer's right to freely select and engage an
employee is the employer's right to discharge the
employee for just and/or authorized causes. To validly
effect terminations of employment, the discharge must
be for a valid cause in the manner required by law. The
purpose of these two-pronged qualifications is to
protect the working class from the employer's
arbitrary and unreasonable exercise of its right to
dismiss.56
Some of the authorized causes to terminate
employment under the Labor Code would be
installation of labor-saving devices, redundancy,
retrenchment to prevent losses and the closing or
cessation of operation of the establishment or
undertaking.57 Each authorized cause has specific
requisites that must be proven by the employer with
substantial evidence before a dismissal may be
considered valid.
Here, the petitioners assert that the economy of
Madagascar weakened due to the global financial
crisis. Consequently, SNC-Lavalin's business also
slowed down. To prove its sagging financial standing,
SNC-Lavalin presented a copy of a news item in the
Financial Post, dated March 5, 2009. They insist that
SNC-Lavalin had no choice but to minimize its
expenditures and operational expenses.58 In addition,
the petitioners argued that the government of
Madagascar prioritized the employment of its citizens,
and not foreigners. Thus, Arriola was terminated
because there was no more job available for him.59
The Court finds that Arriola was not validly dismissed.
The petitioners simply argued that they were suffering
from financial losses and Arriola had to be dismissed.
It was not even clear what specific authorized cause,
whether retrenchment or redundancy, was used to
justify Arriola's dismissal. Worse, the petitioners did
not even present a single credible evidence to support
their claim of financial loss. They simply offered an
unreliable news article which deserves scant
consideration as it is undoubtedly hearsay. Time and
again the Court has ruled that in illegal dismissal cases
like the present one, the onus of proving that the
employee was dismissed and that the dismissal was
not illegal rests on the employer, and failure to
discharge the same would mean that the dismissal is
not justified and, therefore, illegal.60
As to the amount of backpay awarded, the Court finds
that the computation of the CA was valid and proper
based on the employment contract of Arriola. Also, the
issue of whether the petitioners had made partial
payments on the backpay is a matter best addressed
during the execution process.chanrobleslaw
WHEREFORE, the petition is DENIED. The January 24,
2013 Decision of the Court of Appeals in CA-G.R. SP
No. 118869 is AFFIRMED in toto.
SO ORDERED.
Carpio, (Chairperson), Del Castillo, and Leonen, JJ.,
concur.
Brion, J., on leave.chanroblesvirtuallawlibrary
Endnotes:
1 Penned by Associate Justice Edwin D. Sorongon with
Associate Justice Hakim S. Abdulwahid and Associate
Justice Marlene Gonzales-Sison, concurring; rollo, pp.
48-58.
2Penned by Presiding Commissioner Benedicto R.
Palacol with Commissioner Isabel G. Panganiban-
Ortiguerra and Commissioner Nieves Vivar-De Castro,
concurring; id. at 66-72.
3 Id. at 73-75.
4 Id. at 49 and 67.
30
5 CA rollo, pp. 106-107. 392nd Paragraph, Section 3, Article XIII, 1987
Constitution.cralawred
6 Id. at 70, citing NLRC Records, p. 5.
40 Section 2(a), R.A. No. 8042.
7 Id. at 127-128.
41Halagueña v. PAL, Inc., 617 Phil. 502, 520
8Rollo, pp. 59-60; see CA rollo, p. 126. (2009); Servidad v. NLRC, 364 Phil. 518, 527
(1999); Manila Resource Development Corp. v. NLRC,
9 CA rollo, p. 151 G.R. No. 75242, September 2, 1992, 213 SCRA 296.

10 CA rollo, pp. 130-131. 42Philippine

Export and Foreign Loan Guarantee Corp. v.
V.P. Eusebio Construction Inc., 478 Phil. 269, 289
11Rollo, pp. 50 and 68-69. (2004).

12 563 Phil. 1 (2007). 43 See Section 4, R.A. 8042, as amended.

13 CA rollo, p. 201. 44Rollo, p. 42.

14Penned by Labor Arbiter Jose G. De Vera; id. at 59- 45 Id. at 19.

65
46 CA rollo, p. 125.
15 Id. at 65.
47Rollo, p, 42.
16 499 Phil. 512 (2005).
48 Id. at 20.
17 601 Phil. 245 (2009).
49 CA rollo, p. 276.
18Rollo, p. 72.
50 Id. at 284.
19 See CA rollo, p. 794.
512nd Paragraph, Section 3, Article XIII, 1987
20 Id. at 794-802 Constitution.

21Rollo, pp. 57-58. 52 Article 279.

22 Id. at 267-268. 53Azucena, The Labor Code with Comments and Cases,
Volume II, 7th ed., 2010, p. 692.
23 Id. at 145-167.
54 Section 1, Article III, 1987 Constitution.
24 268 Phil. 92 (1990).cralawred
55Supra note 50, p. 692, citing Rance v. NLRC, 246 Phil.
25Rollo, pp. 170-196. 287 (1988).

26 Id. at 232-251.cralawred 56Deoferio

v. Intel Technology Phil, Inc., G.R. No.
202996, June 18, 2014, 726 SCRA 679, 686.
27 Id. at 256-308.
57 Article 283, Labor Code.
28Azucena, The Labor Code with Comments and Cases,
Volume I, 7th ed., 2010, p. 57. 58Rollo, p. 50.

29 Section 2(c), R.A. No. 8042, as amended. 59 Id. at 191.

30 Section 10, R.A. No. 8042, as amended. 60Radar Security & Watchman Agency, Inc. v. Castro,
G.R. No. 211210, December 2, 2015.
31 Supra note 24, pp. 100-101.

32 Id. at 104.

33 Supra note 12, p. 22.

G.R. No. 198587, January 14, 2015
34 602 Phil. 1058 (2009).
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA
35 647 Phil. 43-52 (2010). J. BETIA, Petitioners, v. MA. JOPETTE M.
REBESENCIO, MONTASSAH B. SACAR-ADIONG,
36 G.R. No. 170139, August 5, 2014, 732 SCRA 22. ROUEN RUTH A. CRISTOBAL AND LORAINE S.
SCHNEIDER-CRUZ, Respondents.
37 540 Phil. 65-85 (2006).
DECISION
38 G.R. No. 198587, January 14, 2015.
LEONEN, J.:

31
All Filipinos are entitled to the protection of the rights
guaranteed in the Constitution.
This is a Petition for Review on Certiorari with
application for the issuance of a temporary restraining
order and/or writ of preliminary injunction under
Rule 45 of the 1997 Rules of Civil Procedure praying
that judgment be rendered reversing and setting aside
the June 16, 2011 Decision1 and September 13, 2011
Resolution2 of the Court of Appeals in CA-G.R. SP. No.
113006.
Petitioner Saudi Arabian Airlines (Saudia) is a foreign
corporation established and existing under the laws of
Jeddah, Kingdom of Saudi Arabia. It has a Philippine
office located at 4/F, Metro House Building, Sen. Gil J.
Puyat Avenue, Makati City.3 In its Petition filed with
this court, Saudia identified itself as
follows:chanroblesvirtuallawlibrary
1. Petitioner SAUDIA is a foreign corporation
established and existing under the Royal Decree No.
M/24 of 18.07.1385H (10.02.1962G) in Jeddah,
Kingdom of Saudi Arabia ("KSA"). Its Philippine Office
is located at 4/F Metro House Building, Sen, Gil J. Puyat
Avenue, Makati City (Philippine Office). It may be
served with orders of this Honorable Court through
undersigned counsel at 4th and 6th Floors, Citibank
Center Bldg., 8741 Paseo de Roxas, Makati
City.4 (Emphasis supplied)
Respondents (complainants before the Labor Arbiter)
were recruited and hired by Saudia as Temporary
Flight Attendants with the accreditation and approval
of the Philippine Overseas Employment
Administration.5 After undergoing seminars required
by the Philippine Overseas Employment
Administration for deployment overseas, as well as
training modules offered by Saudia (e.g., initial flight
attendant/training course and transition training),
and after working as Temporary Flight Attendants,
respondents became Permanent Flight Attendants.
They then entered into Cabin Attendant contracts with
Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on
May 16, 1990;6 Montassah B. Sacar-Adiong
(Montassah) and Rouen Ruth A. Cristobal (Rouen
Ruth) on May 22, 1993;7 and Loraine Schneider-Cruz
(Loraine) on August 27, 1995.8
Respondents continued their employment with Saudia
until they were separated from service on various
dates in 2006.9
Respondents contended that the termination of their
employment was illegal. They alleged that the
termination was made solely because they were
pregnant.10
As respondents alleged, they had informed Saudia of
their respective pregnancies and had gone through the
necessary procedures to process their maternity
leaves. Initially, Saudia had given its approval but later
on informed respondents that its management in
Jeddah, Saudi Arabia had disapproved their maternity
leaves. In addition, it required respondents to file their
resignation letters.11
Respondents were told that if they did not resign,
Saudia would terminate them all the same. The threat
of termination entailed the loss of benefits, such as
separation pay and ticket discount entitlements.12
Specifically, Ma. Jopette received a call on October 16,
2006 from Saudia's Base Manager, Abdulmalik Saddik
(Abdulmalik).13 Montassah was informed personally
by Abdulmalik and a certain Faisal Hussein on October
20, 2006 after being required to report to the office
one (1) month into her maternity leave.14Rouen Ruth
was also personally informed by Abdulmalik on
October 17, 2006 after being required to report to the
office by her Group Supervisor.15 Loraine received a
call on October 12, 2006 from her Group Supervisor,
Dakila Salvador.16
Saudia anchored its disapproval of respondents'
maternity leaves and demand for their resignation on
its "Unified Employment Contract for Female Cabin
Attendants" (Unified Contract).17 Under the Unified
Contract, the employment of a Flight Attendant who
becomes pregnant is rendered void. It
provides:chanroblesvirtuallawlibrary
(H) Due to the essential nature of the Air Hostess
functions to be physically fit on board to provide
various services required in normal or emergency
cases on both domestic/international flights beside
her role in maintaining continuous safety and security
of passengers, and since she will not be able to
maintain the required medical fitness while at work in
case of pregnancy, accordingly, if the Air Hostess
becomes pregnant at any time during the term of
this contract, this shall render her employment
contract as void and she will be terminated due to
lack of medical fitness.18 (Emphasis supplied)
In their Comment on the present
Petition,19 respondents emphasized that the Unified
Contract took effect on September 23, 2006 (the first
day of Ramadan),20 well after they had filed and had
their maternity leaves approved. Ma. Jopette filed her
maternity leave application on September 5,
2006.21 Montassah filed her maternity leave
application on August 29, 2006, and its approval was
already indicated in Saudia's computer system by
August 30, 2006.22 Rouen Ruth filed her maternity
leave application on September 13, 2006,23 and
Loraine filed her maternity leave application on
August 22, 2006.24
Rather than comply and tender resignation letters,
respondents filed separate appeal letters that were all
rejected.25
Despite these initial rejections, respondents each
received calls on the morning of November 6, 2006
from Saudia's office secretary informing them that
their maternity leaves had been approved. Saudia,
however, was quick to renege on its approval. On the
evening of November 6, 2006, respondents again
received calls informing them that it had received
notification from Jeddah, Saudi Arabia that their
maternity leaves had been disapproved.26
Faced with the dilemma of resigning or totally losing
their benefits, respondents executed handwritten
resignation letters. In Montassah's and Rouen Ruth's
cases, their resignations were executed on Saudia's
blank letterheads that Saudia had provided. These
letterheads already had the word "RESIGNATION"
typed on the subject portions of their headings when
these were handed to respondents.27
On November 8, 2007, respondents filed a Complaint
32
against Saudia and its officers for illegal dismissal and is MODIFIED only insofar as the computation of the
for underpayment of salary, overtime pay, premium award of separation pay and backwages. For greater
pay for holiday, rest day, premium, service incentive clarity, petitioners are ordered to pay private
leave pay, 13th month pay, separation pay, night shift respondents separation pay which shall be computed
differentials, medical expense reimbursements, from private respondents' first day of employment up
retirement benefits, illegal deduction, lay-over to the finality of this decision, at the rate of one month
expense and allowances, moral and exemplary per year of service and backwages which shall be
damages, and attorney's fees.28 The case was initially computed from the date the private respondents were
assigned to Labor Arbiter Hermino V. Suelo and illegally terminated until finality of this decision.
docketed as NLRC NCR Case No. 00-11-12342-07. Consequently, the ten percent (10%) attorney's fees
shall be based on the total amount of the award. The
Saudia assailed the jurisdiction of the Labor assailed Decision is affirmed in all other respects.
Arbiter.29 It claimed that all the determining points of
contact referred to foreign law and insisted that the The labor arbiter is hereby DIRECTED to make a
Complaint ought to be dismissed on the ground recomputation based on the
of forum non conveniens.30 It added that respondents foregoing.40cralawlawlibrary
had no cause of action as they resigned voluntarily.31 In the Resolution dated September 13, 2011,41 the
Court of Appeals denied petitioners' Motion for
On December 12, 2008, Executive Labor Arbiter Reconsideration.
Fatima Jambaro-Franco rendered the
Decision32dismissing respondents' Complaint. The Hence, this Appeal was filed.
dispositive portion of this Decision
reads:chanroblesvirtuallawlibrary The issues for resolution are the following:
WHEREFORE, premises' considered, judgment is
hereby rendered DISMISSING the instant complaint First, whether the Labor Arbiter and the National
for lack of jurisdiction/merit.33cralawlawlibrary Labor Relations Commission may exercise jurisdiction
On respondents' appeal, the National Labor Relations over Saudi Arabian Airlines and apply Philippine law
Commission's Sixth Division reversed the ruling of in adjudicating the present dispute;
Executive Labor Arbiter Jambaro-Franco. It explained
that "[considering that complainants-appellants are Second, whether respondents' voluntarily resigned or
OFWs, the Labor Arbiters and the NLRC has [sic] were illegally terminated; and
jurisdiction to hear and decide their complaint for
illegal termination."34 On the matter of forum non Lastly, whether Brenda J. Betia may be held personally
conveniens, it noted that there were no special liable along with Saudi Arabian
circumstances that warranted its abstention from Airlines.chanRoblesvirtualLawlibrary
exercising jurisdiction.35 On the issue of whether
respondents were validly dismissed, it held that there I
was nothing on record to support Saudia's claim that
respondents resigned voluntarily. Summons were validly served on Saudia and
jurisdiction over it validly acquired.
The dispositive portion of the November 19, 2009
National Labor Relations Commission There is no doubt that the pleadings and summons
Decision36reads:chanroblesvirtuallawlibrary were served on Saudia through its counsel.42 Saudia,
WHEREFORE, premises considered, judgment is however, claims that the Labor Arbiter and the
hereby rendered finding the appeal impressed with National Labor Relations Commission had no
merit. The respondents-appellees are hereby directed jurisdiction over it because summons were never
to pay complainants-appellants the aggregate amount served on it but on "Saudia Manila."43 Referring to
of SR614,001.24 corresponding to their backwages itself as "Saudia Jeddah," it claims that "Saudia Jeddah"
and separation pay plus ten (10%) percent thereof as and not "Saudia Manila" was the employer of
attorney's fees. The decision of the Labor Arbiter respondents because:
dated December 12, 2008 is hereby VACATED and SET
ASIDE. Attached is the computation prepared by this First, "Saudia Manila" was never a party to the Cabin
Commission and made an integral part of this Attendant contracts entered into by respondents;
Decision.37cralawlawlibrary
In the Resolution dated February 11, 2010,38 the Second, it was "Saudia Jeddah" that provided the funds
National Labor Relations Commission denied to pay for respondents' salaries and benefits; and
petitioners' Motion for Reconsideration.
Lastly, it was with "Saudia Jeddah" that respondents
In the June 16, 2011 Decision,39 the Court of Appeals filed their resignations.44
denied petitioners' Rule 65 Petition and modified the
Decision of the National Labor Relations Commission Saudia posits that respondents' Complaint was
with respect to the award of separation pay and brought against the wrong party because "Saudia
backwages. Manila," upon which summons was served, was never
the employer of respondents.45
The dispositive portion of the Court of Appeals
Decision reads:chanroblesvirtuallawlibrary Saudia is vainly splitting hairs in its effort to absolve
WHEREFORE, the instant petition is hereby DENIED. itself of liability. Other than its bare allegation, there is
The Decision dated November 19, 2009 issued by no basis for concluding that "Saudia Jeddah" is distinct
public respondent, Sixth Division of the National Labor from "Saudia Manila."
Relations Commission - National Capital Region

33
What is clear is Saudia's statement in its own Petition
that what it has is a "Philippine Office . . . located at 4/F
Metro House Building, Sen. Gil J. Puyat Avenue, Makati
City."46 Even in the position paper that Saudia
submitted to the Labor Arbiter,47 what Saudia now
refers to as "Saudia Jeddah" was then only referred to
as "Saudia Head Office at Jeddah, KSA,"48 while what
Saudia now refers to as "Saudia Manila" was then only
referred to as "Saudia's office in Manila."49
By its own admission, Saudia, while a foreign
corporation, has a Philippine office.
Section 3(d) of Republic Act No.. 7042, otherwise
known as the Foreign Investments Act of 1991,
provides the following:chanroblesvirtuallawlibrary
The phrase "doing business" shall include . . .
opening offices, whether called "liaison" offices or
branches; . . . and any other act or acts that imply a
continuity of commercial dealings or arrangements
and contemplate to that extent the performance of acts
or works, or the exercise of some of the functions
normally incident to, and in progressive prosecution of
commercial gain or of the purpose and object of the
business organization. (Emphasis supplied)
A plain application of Section 3(d) of the Foreign
Investments Act leads to no other conclusion than that
Saudia is a foreign corporation doing business in the
Philippines. As such, Saudia may be sued in the
Philippines and is subject to the jurisdiction of
Philippine tribunals.
Moreover, since there is no real distinction between
"Saudia Jeddah" and "Saudia Manila" — the latter
being nothing more than Saudia's local office —
service of summons to Saudia's office in Manila
sufficed to vest jurisdiction over Saudia's person in
Philippine tribunals.chanRoblesvirtualLawlibrary
II
Saudia asserts that Philippine courts and/or tribunals
are not in a position to make an intelligent decision as
to the law and the facts. This is because respondents'
Cabin Attendant contracts require the application of
the laws of Saudi Arabia, rather than those of the
Philippines.50 It claims that the difficulty of
ascertaining foreign law calls into operation the
principle of forum non conveniens, thereby rendering
improper the exercise of jurisdiction by Philippine
tribunals.51
A choice of law governing the validity of contracts or
the interpretation of its provisions dees not
necessarily imply forum non conveniens. Choice of law
and forum non conveniens are entirely different
matters.
Choice of law provisions are an offshoot of the
fundamental principle of autonomy of contracts.
Article 1306 of the Civil Code firmly ensconces
this:chanroblesvirtuallawlibrary
Article 1306. The contracting parties may establish
such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or
public policy.
In contrast, forum non conveniens is a device akin to
the rule against forum shopping. It is designed to
frustrate illicit means for securing advantages and
vexing litigants that would otherwise be possible if the
venue of litigation (or dispute resolution) were left
entirely to the whim of either party.
Contractual choice of law provisions factor into
transnational litigation and dispute resolution in one
of or in a combination of four ways: (1) procedures for
settling disputes, e.g., arbitration; (2) forum, i.e.,
venue; (3) governing law; and (4) basis for
interpretation. Forum non conveniens relates to, but is
not subsumed by, the second of these.
Likewise, contractual choice of law is not
determinative of jurisdiction. Stipulating on the laws
of a given jurisdiction as the governing law of a
contract does not preclude the exercise of jurisdiction
by tribunals elsewhere. The reverse is equally true:
The assumption of jurisdiction by tribunals does
not ipso factomean that it cannot apply and rule on the
basis of the parties' stipulation. In Hasegawa v.
Kitamura:52ChanRoblesVirtualawlibrary
Analytically, jurisdiction and choice of law are two
distinct concepts. Jurisdiction considers whether it is
fair to cause a defendant to travel to this state; choice
of law asks the further question whether the
application of a substantive law V'hich will determine
the merits of the case is fair to both parties. The power
to exercise jurisdiction does not automatically give a
state constitutional authority to apply forum law.
While jurisdiction and the choice of the lex fori will
often, coincide, the "minimum contacts" for one do not
always provide the necessary "significant contacts" for
the other. The question of whether the law of a state
can be applied to a transaction is different from the
question of whether the courts of that state have
jurisdiction to enter a judgment.53cralawlawlibrary
As various dealings, commercial or otherwise, are
facilitated by the progressive ease of communication
and travel, persons from various jurisdictions find
themselves transacting with each other. Contracts
involving foreign elements are, however, nothing new.
Conflict of laws situations precipitated by disputes and
litigation anchored on these contracts are not totally
novel.
Transnational transactions entail differing laws on the
requirements Q for the validity of the formalities and
substantive provisions of contracts and their
interpretation. These transactions inevitably lend
themselves to the possibility of various fora for
litigation and dispute resolution. As observed by an
eminent expert on transnational
law:chanroblesvirtuallawlibrary
The more jurisdictions having an interest in, or merely
even a point of contact with, a transaction or
relationship, the greater the number of potential fora
for the resolution of disputes arising out of or related
to that transaction or relationship. In a world of
increased mobility, where business and personal
transactions transcend national boundaries, the
jurisdiction of a number of different fora may easily be
invoked in a single or a set of related
disputes.54cralawlawlibrary
Philippine law is definite as to what governs the
formal or extrinsic validity of contracts. The first
paragraph of Article 17 of the Civil Code provides that
"[t]he forms and solemnities of contracts . . . shall be
governed by the laws of the country in which they are
executed"55 (i.e., lex loci celebrationis).
34
In contrast, there is no statutorily established mode of
settling conflict of laws situations on matters
pertaining to substantive content of contracts. It has
been noted that three (3) modes have emerged: (1) lex
loci contractus or the law of the place of the making;
(2) lex loci solutionis or the law of the place of
performance; and (3) lex loci intentionis or the law
intended by the parties.56
Given Saudia's assertions, of particular relevance to
resolving the present dispute is lex loci intentionis.
An author observed that Spanish jurists and
commentators "favor lex loci intentionis."57 These
jurists and commentators proceed from the Civil Code
of Spain, which, like our Civil Code, is silent on what
governs the intrinsic validity of contracts, and the
same civil law traditions from which we draw ours.
In this jurisdiction, this court, in Philippine Export and
Foreign Loan Guarantee v. V.P. Eusebio Construction,
Inc.,58 manifested preference for allowing the parties
to select the law applicable to their
contract":chanroblesvirtuallawlibrary
No conflicts rule on essential validity of contracts is
expressly provided for in our laws. The rule followed
by most legal systems, however, is that the intrinsic
validity of a contract must be governed by the lex
contractus or "proper law of the contract." This is the
law voluntarily agreed upon by the parties (the lex loci
voluntatis) or the law intended by them either
expressly or implicitly (the lex loci intentionis). The
law selected may be implied from such factors as
substantial connection with the transaction, or the
nationality or domicile of the parties. Philippine courts
would do well to adopt the first and most basic rule in
most legal systems, namely, to allow the parties to
select the law applicable to their contract, subject to the
limitation that it is not against the law, morals, or
public policy of the forum and that the chosen law must
bear a substantive relationship to the
transaction.59(Emphasis in the original)
Saudia asserts that stipulations set in the Cabin
Attendant contracts require the application of the laws
of Saudi Arabia. It insists that the need to comply with
these stipulations calls into operation the doctrine
of forum non conveniens and, in turn, makes it
necessary for Philippine tribunals to refrain from
exercising jurisdiction.
As mentioned, contractual choice of laws factors into
transnational litigation in any or a combination of four
(4) ways. Moreover, forum non conveniens relates to
one of these: choosing between multiple possible fora.
Nevertheless, the possibility of parallel litigation in
multiple fora — along with the host of difficulties it
poses — is not unique to transnational litigation. It is a
difficulty that similarly arises in disputes well within
the bounds of a singe jurisdiction.
When parallel litigation arises strictly within the
context of a single jurisdiction, such rules as those on
forum shopping, litis pendentia, and res judicata come
into operation. Thus, in the Philippines, the 1997 Rules
on Civil Procedure provide for willful and deliberate
forum shopping as a ground not only for summary
dismissal with prejudice but also for citing parties and
counsels in direct contempt, as well as for the
imposition of administrative sanctions.60 Likewise, the
same rules expressly provide that a party may seek the
dismissal of a Complaint or another pleading asserting
a claim on the ground "[t]hat there is another action
pending between the same parties for the same cause,"
i.e., litis pendentia, or "[t]hat the cause of action is
barred by a prior judgment,"61 i.e., res judicata.
Forum non conveniens, like the rules of forum
shopping, litis pendentia, and res judicata, is a means of
addressing the problem of parallel litigation. While the
rules of forum shopping, litis pendentia, and res
judicata are designed to address the problem of
parallel litigation within a single jurisdiction, forum
non conveniens is a means devised to address parallel
litigation arising in multiple jurisdictions.
Forum non conveniens literally translates to "the forum
is inconvenient."62 It is a concept in private
international law and was devised to combat the "less
than honorable" reasons and excuses that litigants use
to secure procedural advantages, annoy and harass
defendants, avoid overcrowded dockets, and select a
"friendlier" venue.63 Thus, the doctrine of forum non
conveniens addresses the same rationale that the rule
against forum shopping does, albeit on a
multijurisdictional scale.
Forum non conveniens, like res judicata,64 is a concept
originating in common law.65 However, unlike the rule
on res judicata, as well as those on litis pendentia and
forum shopping, forum non conveniens finds no textual
anchor, whether in statute or in procedural rules, in
our civil law system. Nevertheless, jurisprudence has
applied forum non conveniens as basis for a court to
decline its exercise of jurisdiction.66
Forum non conveniens is soundly applied not only to
address parallel litigation and undermine a litigant's
capacity to vex and secure undue advantages by
engaging in forum shopping on an international scale.
It is also grounded on principles of comity and judicial
efficiency.
Consistent with the principle of comity, a tribunal's
desistance in exercising jurisdiction on account
of forum non conveniens is a deferential gesture to the
tribunals of another sovereign. It is a measure that
prevents the former's having to interfere in affairs
which are better and more competently addressed by
the latter. Further, forum non conveniens entails a
recognition not only that tribunals elsewhere
are better suited to rule on and resolve a controversy,
but also, that these tribunals are better positioned to
enforce judgments and, ultimately, to dispense
justice. Forum non conveniens prevents the
embarrassment of an awkward situation where a
tribunal is rendered incompetent in the face of the
greater capability — both analytical and practical — of
a tribunal in another jurisdiction.
The wisdom of avoiding conflicting and unenforceable
judgments is as much a matter of efficiency and
economy as it is a matter of international courtesy. A
court would effectively be neutering itself if it insists
on adjudicating a controversy when it knows full well
that it is in no position to enforce its judgment. Doing
so is not only an exercise in futility; it is an act of
frivolity. It clogs the dockets of a.tribunal and leaves it
to waste its efforts on affairs, which, given
transnational exigencies, will be reduced to mere
35
academic, if not trivial, exercises.
Accordingly, under the doctrine of forum non
conveniens, "a court, in conflicts of law
cases, may refuse impositions on its jurisdiction where
it is not the most 'convenient' or available forum and
the parties are not precluded from seeking remedies
elsewhere."67 In Puyat v. Zabarte,68 this court
recognized the following situations as among those
that may warrant a court's desistance from exercising
jurisdiction:chanroblesvirtuallawlibrary
1) The belief that the matter can be better tried and
decided elsewhere, either because the main aspects
of the case transpired in a foreign jurisdiction or the
material witnesses have their residence there;
2) The belief that the non-resident plaintiff sought the
forum[,] a practice known as forum shopping[,]
merely to secure procedural advantages or to
convey or harass the defendant;
3) The unwillingness to extend local judicial facilities
to non residents or aliens when the docket may
already be overcrowded;
4) The inadequacy of the local judicial machinery for
effectuating the right sought to be maintained; and
5) The difficulty of ascertaining foreign law.69
In Bank of America, NT&SA, Bank of America
International, Ltd. v. Court of Appeals,70 this court
underscored that a Philippine court may properly
assume jurisdiction over a case if it chooses to do so to
the extent: "(1) that the Philippine Court is one to
which the parties may conveniently resort to; (2) that
the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and (3)
that the Philippine Court has or is likely to have power
to enforce its decision."71
The use of the word "may" (i.e., "may refuse
impositions on its jurisdiction"72) in the decisions
shows that the matter of jurisdiction rests on the
sound discretion of a court. Neither the mere
invocation of forum non conveniens nor the averment
of foreign elements operates to automatically divest a
court of jurisdiction. Rather, a court should renounce
jurisdiction only "after 'vital facts are established, to
determine whether special circumstances' require the
court's desistance."73 As the propriety of
applying forum non conveniens is contingent on a
factual determination, it is, therefore, a matter of
defense.74
The second sentence of Rule 9, Section 1 of the 1997
Rules of Civil Procedure is exclusive in its recital of the
grounds for dismissal that are exempt from the
omnibus motion rule: (1) lack of jurisdiction over the
subject matter; (2) litis pendentia; (3) res judicata; and
(4) prescription. Moreover, dismissal on account
offorum non conveniens is a fundamentally
discretionary matter. It is, therefore, not a matter for a
defendant to foist upon the court at his or her own
convenience; rather, it must be pleaded at the earliest
possible opportunity.
On the matter of pleading forum non conveniens, we
state the rule, thus: Forum non conveniens must not
only be clearly pleaded as a ground for dismissal; it
must be pleaded as such at the earliest possible
opportunity. Otherwise, it shall be deemed waived.
This court notes that in Hasegawa,76 this court stated
that forum non conveniens is not a ground for a motion
to dismiss. The factual ambience of this case however
does not squarely raise the viability of this doctrine.
Until the opportunity comes to review the use of
motions to dismiss for parallel
litigation, Hasegawa remains existing doctrine.
Consistent with forum non conveniens as
fundamentally a factual matter, it is imperative that it
proceed from & factually established basis. It would be
improper to dismiss an action pursuant to forum non
conveniens based merely on a perceived, likely, or
hypothetical multiplicity of fora. Thus, a defendant
must also plead and show that a prior suit has, in fact,
been brought in another jurisdiction.
The existence of a prior suit makes real the vexation
engendered by duplicitous litigation, the
embarrassment of intruding into the affairs of another
sovereign, and the squandering of judicial efforts in
resolving a dispute already lodged and better resolved
elsewhere. As has been
noted:chanroblesvirtuallawlibrary
A case will not be stayed o dismissed on [forum] non
conveniens grounds unless the plaintiff is shown to
have an available alternative forum elsewhere. On this,
the moving party bears the burden of proof.
A number of factors affect the assessment of an
alternative forum's adequacy. The statute of
limitations abroad may have run, of the foreign court
may lack either subject matter or personal jurisdiction
over the defendant. . . . Occasionally, doubts will be
raised as to the integrity or impartiality of the foreign
court (based, for example, on suspicions of corruption
or bias in favor of local nationals), as to the fairness of
its judicial procedures, or as to is operational
efficiency (due, for example, to lack of resources,
congestion and delay, or interfering circumstances
such as a civil unrest). In one noted case, [it was
found] that delays of 'up to a quarter of a century'
rendered the foreign forum... inadequate for these
purposes.77cralawlawlibrary
We deem it more appropriate and in the greater
interest of prudence that a defendant not only allege
supposed dangerous tendencies in litigating in this
jurisdiction; the defendant must also show that such
danger is real and present in that litigation or dispute
resolution has commenced in another
jurisdiction and that a foreign tribunal has chosen to
exercise jurisdiction.
III
Forum non conveniens finds no application and does
not operate to divest Philippine tribunals of
jurisdiction and to require the application of foreign
law.
Saudia invokes forum non conveniens to supposedly
effectuate the stipulations of the Cabin Attendant
contracts that require the application of the laws of
Saudi Arabia.
Forum non conveniens relates to forum, not to the
choice of governing law. Thai forum non
conveniensmay ultimately result in the application of
foreign law is merely an incident of its application. In
this strict sense, forum non conveniens is not
applicable. It is not the primarily pivotal consideration
in this case.
36

In any case, even a further consideration of the
applicability of forum non conveniens on the incidental
matter of the law governing respondents' relation with
Saudia leads to the conclusion that it is improper for
Philippine tribunals to divest themselves of
jurisdiction.
Any evaluation of the propriety of contracting parties'
choice of a forum and'its incidents must grapple with
two (2) considerations: first, the availability and
adequacy of recourse to a foreign tribunal; and second,
the question of where, as between the forum court and a
foreign court, the balance of interests inhering in a
dispute weighs more heavily.
The first is a pragmatic matter. It relates to the
viability of ceding jurisdiction to a foreign tribunal and
can be resolved by juxtaposing the competencies and
practical circumstances of the tribunals in alternative
fora. Exigencies, like the statute of limitations, capacity
to enforce orders and judgments, access to records,
requirements for the acquisition of jurisdiction, and
even questions relating to the integrity of foreign
courts, may render undesirable or even totally
unfeasible recourse to a foreign court. As mentioned,
we consider it in the greater interest of prudence that
a defendant show, in pleading forum non conveniens,
that litigation has commenced in another jurisdiction
and that a foieign tribunal has, in fact, chosen to
exercise jurisdiction.
Two (2) factors weigh into a court's appraisal of the
balance of interests inhering in a dispute: first, the
vinculum which the parties and their relation have to a
given jurisdiction; and second, the public interest that
must animate a tribunal, in its capacity as an agent of
the sovereign, in choosing to assume or decline
jurisdiction. The first is more concerned with the
parties, their personal circumstances, and private
interests; the second concerns itself with the state and
the greater social order.
In considering the vinculum, a court must look into the
preponderance of linkages which the parties and their
transaction may have to either jurisdiction. In this
respect, factors, such as the parties' respective
nationalities and places of negotiation, execution,
performance, engagement or deployment, come into
play.
In considering public interest, a court proceeds with a
consciousness that it is an organ of the state. It must,
thus, determine if the interests of the sovereign (which
acts through it) are outweighed by those of the
alternative jurisdiction. In this respect, the court
delves into a consideration of public policy. Should it
find that public interest weighs more heavily in favor
of its assumption of jurisdiction, it should proceed in
adjudicating the dispute, any doubt or .contrary view
arising from the preponderance of linkages
notwithstanding.
Our law on contracts recognizes the validity of
contractual choice of law provisions. Where such
provisions exist, Philippine tribunals, acting as the
forum court, generally defer to the parties' articulated
choice.
This is consistent with the fundamental principle of
autonomy of contracts. Article 1306 of the Civ:l Code
expressly provides that "[t]he contracting parties may
establish 'such stipulations, clauses, terms and
conditions as they may deem
convenient."78 Nevertheless, while a Philippine
tribunal (acting as the forum court) is called upon to
respect the parties' choice of governing law, such
respect must not be so permissive as to lose sight of
considerations of law, morals, good customs, public
order, or public policy that underlie the contract
central to the controversy.
Specifically with respect to public policy, in Pakistan
International Airlines Corporation v. Ople,79 this court
explained that:chanroblesvirtuallawlibrary
counter-balancing the principle of autonomy of
contracting parties is the equally general rule that
provisions of applicable law, especially provisions
relating to matters affected with public policy, are
deemed written inta the contract. Put a little
differently, the governing principle is that parties may
not contract away applicable provisions of law
especially peremptory provisions dealing with matters
heavily impressed with public interest.80(Emphasis
supplied)
Article II, Section 14 of the 1987 Constitution provides
that "[t]he State ... shall ensure the fundamental
equality before the law of women and men."
Contrasted with Article II, Section 1 of the 1987
Constitution's statement that "[n]o person shall ... be
denied the equal protection of the laws," Article II,
Section 14 exhorts the State to "ensure." This does not
only mean that the Philippines shall not countenance
nor lend legal recognition and approbation to
measures that discriminate on the basis of one's being
male or female. It imposes an obligation to actively
engage in securing the fundamental equality of men
and women.
The Convention on the Elimination of all Forms of
Discrimination against Women (CEDAW), signed and
ratified by the Philippines on July 15, 1980, and on
August 5, 1981, respectively,81 is part of the law of the
land. In view of the widespread signing and
ratification of, as well as adherence (in practice) to it
by states, it may even be said that many provisions of
the CEDAW may have become customary international
law. The CEDAW gives effect to the Constitution's
policy statement in Article II, Section 14. Article I of
the CEDAW defines "discrimination against women"
as:chanroblesvirtuallawlibrary
any distinction, exclusion or restriction made on the
basis of sex which has the effect or purpose of
impairing or nullifying the recognition, enjoyment or
exercise by women, irrespective of their marital status,
on a basis of equality of men and women, of human
rights and fundamental freedoms in the political,
economic, social, cultural, civil or any other
field.82cralawlawlibrary
The constitutional exhortation to ensure fundamental
equality, as illumined by its enabling law, the CEDAW,
must inform and animate all the actions of all
personalities acting on behalf of the State. It is,
therefore, the bounden duty of this court, in rendering
judgment on the disputes brought before it, to ensure
that no discrimination is heaped upon women on the
mere basis of their being women. This is a point so
basic and central that all our discussions and
pronouncements — regardless of whatever averments
there may be of foreign law — must proceed from this
37
premise.
So informed and animated, we emphasize the glaringly
discriminatory nature of Saudia's policy. As argued by
respondents, Saudia's policy entails the termination of
employment of flight attendants who become
pregnant. At the risk of stating the obvious, pregnancy
is an occurrence that pertains specifically to women.
Saudia's policy excludes from and restricts
employment on the basis of no other consideration but
sex.
We do not lose sight of the reality that pregnancy does
present physical limitations that may render difficult
the performance of functions associated with being a
flight attendant. Nevertheless, it would be the height of
iniquity to view pregnancy as a disability so
permanent and immutable that, it must entail the
termination of one's employment. It is clear to us that
any individual, regardless of gender, may be subject to
exigencies that limit the performance of functions.
However, we fail to appreciate how pregnancy could
be such an impairing occurrence that it leaves no other
recourse but the complete termination of the means
through which a woman earns a living.
Apart from the constitutional policy on the
fundamental equality before the law of men and
women, it is settled that contracts relating to labor and
employment are impressed with public interest.
Article 1700 of the Civil Code provides that "[t]he
relation between capital and labor are not merely
contractual. They are so impressed with public
interest that labor contracts must yield to the common
good."
Consistent with this, this court's pronouncements
in Pakistan International Airlines Corporation83 are
clear and unmistakable:chanroblesvirtuallawlibrary
Petitioner PIA cannot take refuge in paragraph 10 of
its employment agreement which specifies, firstly, the
law of Pakistan as the applicable law of the agreement,
and, secondly, lays the venue for settlement of any
dispute arising out of or in connection with the
agreement "only [in] courts of Karachi, Pakistan". The
first clause of paragraph 10 cannot be invoked to
prevent the application of Philippine labor laws
and'regulations to the subject matter of this case, i.e.,
the employer-employee relationship between
petitioner PIA and private respondents. We have
already pointed out that the relationship is much
affected with public interest and that the otherwise
applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some
other law to govern their relationship. . . . Under these
circumstances, paragraph 10 of the employment
agreement cannot be given effect so as to oust
Philippine agencies and courts of the jurisdiction
vested upon them by Philippine law.84 (Emphasis
supplied)
As the present dispute relates to (what the
respondents allege to be) the illegal termination of
respondents' employment, this case is immutably a
matter of public interest and public policy. Consistent
with clear pronouncements in law and jurisprudence,
Philippine laws properly find application in and
govern this case. 'Moreover, as this premise for
Saudia's insistence on the application forum non
conveniens has been shattered, it follows that
Philippine tribunals may properly assume jurisdiction
over the present controversy. Philippine
jurisprudence provides ample illustrations of when a
court's renunciation of jurisdiction on account
of forum non conveniens is proper or improper.'
In Philsec Investment Corporation v. Court of
Appeals,85 this court noted that the trial court failed to
consider that one of the plaintiffs was a domestic
corporation, that one of the defendants was a Filipino,
and that it was the extinguishment of the latter's debt
that was the object of the transaction subject of the
litigation. Thus, this court held, among others, that the
trial court's refusal to assume jurisdiction was not
justified by forum non conveniens and remanded the
case to the trial court.
In Raytheon International, Inc. v. Rouzie, Jr.,86 this court
sustained the trial court's assumption of jurisdiction
considering that the trial court could properly enforce
judgment on the petitioner which was a foreign
corporation licensed to do business in the Philippines.
In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court
found no reason to disturb the trial court's assumption
of jurisdiction over a case in which, as noted by the
trial court, "it is more convenient to hear and decide
the case in the Philippines because Todaro [the
plaintiff] resides in the Philippines and the contract
allegedly breached involve[d] employment in the
Philippines."88
In Pacific Consultants International Asia, Inc. v.
Schonfeld,89 this court held that the fact that the
complainant in an illegal dismissal case was a
Canadian citizen and a repatriate did not warrant the
application of forum non conveniens considering that:
(1) the Labor Code does not include forum non
conveniens as a ground for the dismissal of a complaint
for illegal dismissal; (2) the propriety of dismissing a
case based on forum non conveniens requires a factual
determination; and (3) the requisites for assumption
of jurisdiction as laid out in Bank of America,
NT&SA90 were all satisfied.
In contrast, this court ruled in The Manila Hotel Corp. v.
National Labor Relations Commission91 that the
National Labor Relations Q Commission was a
seriously inconvenient forum. In that case, private
respondent Marcelo G. Santos was working in the
Sultanate of Oman when he received a letter from
Palace Hotel recruiting him for employment in Beijing,
China. Santos accepted the offer. Subsequently,
however, he was released from employment
supposedly due to business reverses arising from
political upheavals in China (i.e., the Tiananmen
Square incidents of 1989). Santos later filed a
Complaint for illegal dismissal impleading Palace
Hotel's General Manager, Mr. Gerhard Schmidt, the
Manila Hotel International Company Ltd. (which was,
responsible for training Palace Hotel's personnel and
staff), and the Manila Hotel Corporation (which owned
50% of Manila Hotel International Company Ltd.'s
capital stock).
In ruling against the National Labor Relations
Commission's exercise of jurisdiction, this court noted
that the main aspects of the case transpired in two (2)
foreign jurisdictions, Oman and China, and that the
case involved purely foreign elements. Specifically,
Santos was directly hired by a foreign employer
38
through correspondence sent to Oman. Also, the
proper defendants were neither Philippine nationals
nor engaged in business in the Philippines, while the
main witnesses were not residents of the Philippines.
Likewise, this court noted that the National Labor
Relations Commission was in no position to conduct
the following: first, determine the law governing the
employment contract, as it was entered into in foreign
soil; second, determine the facts, as Santos'
employment was terminated in Beijing; and third,
enforce its judgment, since Santos' employer, Palace
Hotel, was incorporated under the laws of China and
was not even served with summons.
Contrary to Manila Hotel, the case now before us does
not entail a preponderance of linkages that favor a
foreign jurisdiction.
Here, the circumstances of the parties and their
relation do not approximate the circumstances
enumerated in Puyat,92 which this court recognized as
possibly justifying the desistance of Philippine
tribunals from exercising jurisdiction.
First, there is no basis for concluding that the case can
be more conveniently tried elsewhere. As established
earlier, Saudia is doing business in the Philippines. For
their part, all four (4) respondents are Filipino citizens
maintaining residence in the Philippines and, apart
from their previous employment with Saudia, have no
other connection to the Kingdom of Saudi Arabia. It
would even be to respondents' inconvenience if this
case were to be tried elsewhere.
Second, the records are bereft of any indication that
respondents filed their Complaint in an effort to
engage in forum shopping or to vex and inconvenience
Saudia.
Third, there is no indication of "unwillingness to
extend local judicial facilities to non-residents or
aliens."93 That Saudia has managed to bring the
present controversy all the way to this court proves
this.
Fourth, it cannot be said that the local judicial
machinery is inadequate for effectuating the right
sought to be maintained. Summons was properly
served on Saudia and jurisdiction over its person was
validly acquired.
Lastly, there is not even room for considering foreign
law. Philippine law properly governs the present
dispute.
As the question of applicable law has been settled, the
supposed difficulty of ascertaining foreign law (which
requires the application of forum non conveniens)
provides no insurmountable inconvenience or special
circumstance that will justify depriving Philippine
tribunals of jurisdiction.
Even if we were to assume, for the sake of discussion,
that it is the laws of Saudi Arabia which should apply,
it does not follow that Philippine tribunals should
refrain from exercising jurisdiction. To. recall our
pronouncements in Puyat,94 as well as in Bank of
America, NT&SA,95 it is not so much the mere
applicability of foreign law which calls into
operation forum non conveniens. Rather, what justifies
a court's desistance from exercising jurisdiction is
"[t]he difficulty of ascertaining foreign law"96 or the
inability of a "Philippine Court to make an intelligent
decision as to the law[.]"97
Consistent with lex loci intentionis, to the extent that it
is proper and practicable (i.e., "to make an intelligent
decision"98), Philippine tribunals may apply the
foreign law selected by the parties. In fact, (albeit
without meaning to make a pronouncement on the
accuracy and reliability of respondents' citation) in
this case, respondents themselves have made
averments as to the laws of Saudi Arabia. In their
Comment, respondents
write:chanroblesvirtuallawlibrary
Under the Labor Laws of Saudi Arabia and the
Philippines[,] it is illegal and unlawful to terminate the
employment of any woman by virtue of pregnancy.
The law in Saudi Arabia is even more harsh and strict
[sic] in that no employer can terminate the
employment of a female worker or give her a warning
of the same while on Maternity Leave, the specific
provision of Saudi Labor Laws on the matter is hereto
quoted as follows:chanroblesvirtuallawlibrary
"An employer may not terminate the employment of a
female worker or give her a warning of the same while
on maternity leave." (Article 155, Labor Law of the
Kingdom of Saudi Arabia, Royal Decree No.
M/51.)99cralawlawlibrary
All told, the considerations for assumption of
jurisdiction by Philippine tribunals as outlined in Bank
of America, NT&SA100 have been satisfied. First, all the
parties are based in the Philippines and all the
material incidents transpired in this jurisdiction. Thus,
the parties may conveniently seek relief from
Philippine tribunals. Second, Philippine tribunals are
in a position to make an intelligent decision as to the
law and the facts. Third, Philippine tribunals are in a
position to enforce their decisions. There is no
compelling basis for ceding jurisdiction to a foreign
tribunal. Quite the contrary, the immense public policy
considerations attendant to this case behoove
Philippine tribunals to not shy away from their duty to
rule on the case.chanRoblesvirtualLawlibrary
IV
Respondents were illegally terminated.
In Bilbao v. Saudi Arabian Airlines,101 this court defined
voluntary resignation as "the voluntary act of an
employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the
exigency of the service, and one has no other choice
but to dissociate oneself from employment. It is a
formal pronouncement or relinquishment of an office,
with the intention of relinquishing the office
accompanied by the act of relinquishment."102 Thus,
essential to the act of resignation is voluntariness. It
must be the result of an employee's exercise of his or
her own will.
In the same case of Bilbao, this court advanced a
means for determining whether an employee resigned
voluntarily:chanroblesvirtuallawlibrary
As the intent to relinquish must concur with the overt
act of relinquishment, the acts of the employee before
and after the alleged resignation must be considered in
determining whether he or she, in fact, intended, to
sever his or her employment.103 (Emphasis supplied)
39
On the other hand, constructive dismissal has been
defined as "cessation of work because 'continued
employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank or a
diminution in pay' and other benefits."104
In Penaflor v. Outdoor Clothing Manufacturing
Corporation,105 constructive dismissal has been
described as tantamount to "involuntarily [sic]
resignation due to the harsh, hostile, and unfavorable
conditions set by the employer."106 In the same case, it
was noted that "[t]he gauge for constructive dismissal
is whether a reasonable person in the employee's
position would feel compelled to give up his
employment under the prevailing circumstances."107
Applying the cited standards on resignation and
constructive dismissal, it is clear that respondents
were constructively dismissed. Hence, their
termination was illegal.
The termination of respondents' employment
happened when they were pregnant and expecting to
incur costs on account of child delivery and infant
rearing. As noted by the Court of Appeals, pregnancy is
a time when they need employment to sustain their
families.108 Indeed, it goes against normal and
reasonable human behavior to abandon one's
livelihood in a time of great financial need.
It is clear that respondents intended to remain
employed with Saudia. All they did was avail of their
maternity leaves. Evidently, the very nature of a
maternity leave means that a pregnant employee will
not report for work only temporarily and that she will
resume the performance of her duties as soon as the
leave allowance expires.
It is also clear that respondents exerted all efforts to'
remain employed with Saudia. Each of them
repeatedly filed appeal letters (as much as five [5]
letters in the case of Rebesencio109) asking Saudia to
reconsider the ultimatum that they resign or be
terminated along with the forfeiture of their benefits.
Some of them even went to Saudia's office to
personally seek reconsideration.110
Respondents also adduced a copy of the "Unified
Employment Contract for Female Cabin
Attendants."111This contract deemed void the
employment of a flight attendant who becomes
pregnant and threatened termination due to lack of
medical fitness.112 The threat of termination (and the
forfeiture of benefits that it entailed) is enough to
compel a reasonable person in respondents' position
to give up his or her employment.
Saudia draws attention to how respondents'
resignation letters were supposedly made in their own
handwriting. This minutia fails to surmount all the
other indications negating any voluntariness on
respondents' part. If at all, these same resignation
letters are proof of how any supposed resignation did
not arise from respondents' own initiative. As earlier
pointed out, respondents' resignations were executed
on Saudia's blank letterheads that Saudia had
provided. These letterheads already had the word
"RESIGNATION" typed on the subject portion of their
respective headings when these were handed to
respondents.113ChanRoblesVirtualawlibrary
"In termination cases, the burden of proving just or
valid cause for dismissing an employee rests on the
employer."114 In this case, Saudia makes much of how
respondents supposedly completed their exit
interviews, executed quitclaims, received their
separation pay, and took more than a year to file their
Complaint.115 If at all, however, these circumstances
prove only the fact of their occurrence, nothing more.
The voluntariness of respondents' departure from
Saudia is non sequitur.
Mere compliance with standard procedures or
processes, such as the completion of their exit
interviews, neither negates compulsion nor indicates
voluntariness.
As with respondent's resignation letters, their exit
interview forms even support their claim of illegal
dismissal and militates against Saudia's arguments.
These exit interview forms, as reproduced by Saudia in
its own Petition, confirms the unfavorable conditions
as regards respondents' maternity leaves. Ma.
Jopette's and Loraine's exit interview forms are
particularly telling:chanroblesvirtuallawlibrary
a. From Ma. Jopette's exit interview form:
3. In what respects has the job met or failed to meet
your expectations?
THE SUDDEN TWIST OF DECISION REGARDING THE
MATERNITY LEAVE.116
b. From Loraine's exit interview form:
1. What are your main reasons for leaving Saudia?
What company are you joining?
xxx xxx xxx
Others
CHANGING POLICIES REGARDING MATERNITY LEAVE
(PREGNANCY)117
As to respondents' quitclaims, in Phil. Employ Services
and Resources, Inc. v. Paramio,118 this court noted that
"[i]f (a) there is clear proof that the waiver was
wangled from an unsuspecting or gullible person; or
(b) the terms of the settlement are unconscionable,
and on their face invalid, such quitclaims must be
struck down as invalid or illegal."119 Respondents
executed their quitclaims after having been unfairly
given an ultimatum to resign or be terminated (and
forfeit their benefits).chanRoblesvirtualLawlibrary
V
Having been illegally and unjustly dismissed,
respondents are entitled to full backwages and
benefits from the time of their termination until the
finality of this Decision. They are likewise entitled to
separation pay in the amount of one (1) month's
salary for every year of service until the fmality of this
Decision, with a fraction of a year of at least six (6)
months being counted as one (1) whole year.
Moreover, "[m]oral damages are awarded in
termination cases where the employee's dismissal was
attended by bad faith, malice or fraud, or where it
constitutes an act oppressive to labor, or where it was
40
done in a manner contrary to morals, good customs or
public policy."120 In this case, Saudia terminated
respondents' employment in a manner that is patently
discriminatory and running afoul of the public interest
that underlies employer-employee relationships. As
such, respondents are entitled to moral damages.
court clarified that "[b]ad faith does not connote bad
judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious doing
of wrong; it means breach of a known duty through
some motive or interest or ill will; it partakes of the
nature of fraud."133

To provide an "example or correction for the public Respondents have not produced proof to show that
good"121 as against such discriminatory and callous Brenda J. Betia acted in bad faith or with malice as
schemes, respondents are likewise entitled to regards their termination. Thus, she may not be held
exemplary damages. solidarity liable with Saudia.cralawred

In a long line of cases, this court awarded exemplary
damages to illegally dismissed employees whose
"dismissal[s were] effected in a wanton, oppressive or
malevolent manner."122 This court has awarded
exemplary damages to employees who were
terminated on such frivolous, arbitrary, and unjust
grounds as membership in or involvement with labor
unions,123 injuries sustained in the course of
employment,124development of a medical condition
due to the employer's own violation of the
employment contract,125and lodging of a Complaint
against the employer.126 Exemplary damages were
also awarded to employees who were deemed illegally
dismissed by an employer in an attempt to evade
compliance with statutorily established employee
benefits.127 Likewise, employees dismissed for
supposedly just causes, but in violation of due process
requirements, were awarded exemplary damages.128
These examples pale in comparison to the present
controversy. Stripped of all unnecessary complexities,
respondents were dismissed for no other reason than
simply that they were pregnant. This is as wanton,
oppressive, and tainted with bad faith as any reason
for termination of employment can be. This is no
ordinary case of illegal dismissal. This is a case of
manifest gender discrimination. It is an affront not
only to our statutes and policies on employees'
security of tenure, but more so, to the Constitution's
dictum of fundamental equality between men and
women.129
WHEREFORE, with the MODIFICATIONS that first,
petitioner Brenda J. Betia is not solidarity liable with
petitioner Saudi Arabian Airlines, and second, that
petitioner Saudi Arabian Airlines is liable for moral
and exemplary damages. The June 16, 2011 Decision
and the September 13, 2011 Resolution of the Court of
Appeals in CA-G.R. SP. No. 113006 are
hereby AFFIRMED in all other respects. Accordingly,
petitioner Saudi Arabian Airlines is ordered to pay
respondents:
(1)Full backwages and all other benefits computed
from the respective dates in which each of the
respondents were illegally terminated until the
finality of this Decision;
(2)Separation pay computed from the respective dates
in which each of the respondents commenced
employment until the finality of this Decision at the
rate of one (1) month's salary for every year of
service, with a fraction of a year of at least six (6)
months being counted as one (1) whole year;
(3)Moral damages in the amount of P100,000.00 per
respondent;
(4)Exemplary damages in the amount of P200,000.00
per respondent; and
(5)Attorney's fees equivalent to 10% of the total
award.
Interest of 6% per annum shall likewise be imposed
on the total judgment award from the finality of this
Decision until full satisfaction thereof.

The award of exemplary damages is, therefore, This case is REMANDED to the Labor Arbiter to make
warranted, not only to remind employers of the need a detailed computation of the amounts due to
to adhere to the requirements of procedural and respondents which petitioner Saudi Arabian Airlines
substantive due process in termination of should pay without delay.
employment, but more importantly, to demonstrate
that gender discrimination should in no case be SO ORDERED.chanroblesvirtuallawlibrary
countenanced.
Carpio, (Chairperson), Velasco, Jr.,*Del Castillo,
Having been compelled to litigate to seek reliefs for and Mendoza, JJ., concur.
their illegal and unjust dismissal, respondents are
likewise entitled to attorney's fees in the amount of Endnotes:
10% of the total monetary award.130

VI *Designated acting member per S.O. No. 1910 dated

January 12, 2015.
Petitioner Brenda J. Betia may not be held liable.
1Rollo, pp. 61-75.
A corporation has a personality separate and distinct
from those of the persons composing it. Thus, as a rule, 2 Id. at 106-108.
corporate directors and officers are not liable for the
illegal termination of a corporation's employees. It is 3 Id. at 9.
only when they acted in bad faith or with malice that
they become solidarity liable with the corporation.131 4 Id.
In Ever Electrical Manufacturing, Inc. (EEMI) v. 5 Id. at 633.
Samahang Manggagawa ng Ever Electrical,132 this

41
6 Id. at 596. 40 Id. at 74.

7 Id. at 604 and 614. 41 Id. at 106-108.

8 Id. at 625. 42 Id. at 9.

9 Id. at 62. 43 Id. at 21.

10 Id. at 635. 44 Id. at 22.

11 Id. at 600, 607-608, 618-619, and 627. 45 Id. at 21-23.

12 Id. at 600, 608, 620, and 627. 46 Id. at 9.

13 Id. at 600. 47Id. at 173-203. Saudia's position paper, attached as

Annex "C" in the Petition for Certiorari before the
14 Id. at 607-608. Court of Appeals, is attached to the Petition for Review
on Certiorari before this court as Annex "D".
15 Id. at 618-619.
48 Id. at 176.
16 Id. at 627.
49 Id. at 177-181.
17Id. at 736-740. The Unified Contract is attached to
Respondents' Comment as Annex "ZZ." 50 Id. at 23.

18 Id. at 739. 51 Id.

19 Id. at 593-670. 52563 Phil. 572 (2007) [Per J. Nachura, Third

Division].
20 Id. at 608.
53Id. at 585, citing COQUIA AND AGUILING-
21 Id. at 600. PANGALANGAN, CONFLICT OF LAWS 64 (1995 ed.);
SCOLES, HAY, BORCHERS, SYMEONIDES, CONFLICT
22 Id. at 607. OF LAWS 162 (3rd ed., 2000); and Shaffer v. Heitner,
433 U.S. 186, 215; 97 S.Ct. 2569, 2585
23 Id. at 618. (1977), citing Justice Black's Dissenting Opinion
in Hanson v. Denckla, 357 U.S. 235, 258; 78 S. Ct. 1228,
24 Id. at 626. 1242 (1958).

25 Id. at 601, 608-609, 619, and 628. 54GEORGE A. BERMANN, TRANSNATIONAL

LITIGATION IN A NUTSHELL 86 (2003).
26 Id. at 601-602, 609-610, 621, and 630.
55 CIVIL CODE, art. 17.
27Id. at 610. See also pp. 715 and 750, Annexes "FF"
and "EEE" of Respondents' Comment. 56JORGE R. COQUIA AND ELIZABETH AGUILING-
PANGALANGAN, CONFLICT OF LAWS: CASES,
28 Id. at 16, 372-373. MATERIALS AND COMMENTS, 331 (2000).

29 Id. at 297-307. 57JOVITO R. SALONGA, PRIVATE INTERNATIONAL

LAW 355 (1995 ed.), citing Trias de Bes, Conception de
30 Id. at 307-312. Droit International Prive, Rescueil 1930:657; Repert.
257 No. 124.
31 Id. at 184-201.
58478 Phil. 269 (2004) [Per C.J. Davide, Jr., First
32 Id. at 372-383. Division].

33 Id. at 383. 59Id. at 288-289, citing EDGARDO L. PARAS,

PHILIPPINE CONFLICT OF LAWS 414 (6th ed., 1984);
34 Id. at 163. and JOVITO R. SALONGA, PRIVATE INTERNATIONAL
LAW 356 (1995 ed.).
35 Id. at 164.
60 1997 RULES OF CIV. PROC., Rule 7, sec. 5:
36 Id. at 159-167.
Section 5. Certification against forum shopping. — The
37 Id. at 166. plaintiff or principal party shall certify under oath in
the complaint or other initiatory pleading asserting a
38 Id. at 170-172. claim for relief, or in a sworn certification annexed
thereto and simultaneously filed therewith: (a) that he
39 Id. at 61-75. has not theretofore commenced any action or filed any
claim involving the same issues in any court, tribunal

42
or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending "Most civil law jurisdictions are quite unfamiliar with,
therein; (b) if there is such other pending action or and find odd, the notion of dismissals or stays for forum
claim, a complete statement of the present status non conveniens; they tend to address problems of
thereof; and (c) if he should thereafter learn that the parallel litigation, if at all, through other instruments. . .
same or similar action or claim has been filed or is . But, in the US, as in numerous other common law
pending, he shall report that fact within five (5) days jurisdictions, the discretionary doctrine of'forum non
therefrom to the court wherein his aforesaid conveniens is well established and frequently applied."
complaint or initiatory pleading has been filed.
66Byway of example, see The Manila Hotel Corporation
Failure to comply with the foregoing requirements v. National Labor Relations Commission, 397 Phil. 1
shall not be curable by mere amendment of the (2000) [Per J. Pardo, First Division].
complaint or other initiatory pleading but shall be
cause for the dismissal of the case without prejudice, 67FirstPhilippine International Bank v. Court of Appeals,
unless otherwise provided, upon motion and after 322 Phil. 280, 303 (1996) [Per J. Panganiban, Third
hearing. The submission of a false certification or non- Division].
compliance with any of the undertakings therein shall
constitute indirect contempt of court, without 68405 Phil. 413 (2001) [Per J. Panganiban, Third
prejudice to the corresponding administrative and Division].
criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum 69Id. at 432, citing JOVITO R. SALONGA, PRIVATE
shopping, the same shall be ground for summary INTERNATIONAL LAW 47 (1979 ed.).
dismissal with prejudice and shall constitute direct
contempt, as well as a cause for administrative 70448 Phil. 181 (2003) [Per J. Austria-Martinez, Second
sanctions. Division].

61 1997 RULES OF CIV. PROC., Rule 16/sec. 1: 71Id. at 196, citing Communication Materials and
Design, Inc. v. Court of Appeals, 329 Phil. 487 (1996)
Section 1. Grounds. — Within the time for but before [Per J. Torres, Jr., Second Division].
filing the answer to the complaint or pleading
asserting a claim, a motion to dismiss may be made on 72FirstPhilippine International Bank v. Court of Appeals,
any of the following grounds: 322 Phil. 280, 303 (1996) [Per J. Panganiban, Third
Division].
....
73Philsec Investment Corporation v. Court of Appeals,
(e) That there is another action pending between the 340 Phil. 232, 242 (1997) [Per J. Mendoza, Second
same parties for the same cause; Division], citing K.K. Shell Sekiyu Osaka Hatsubaisho v.
Court of Appeals, 266 Phil. 156, 165 (1990) [Per J.
(f) That the cause of action is barred by a prior Cortes, Third Division]; Hongkong and Shanghai
judgment or by the statute of limitations[.] Banking Corp. v. Sherman, 257 Phil. 340 (1989) [Per J.
Medialdea, First Division].
62Pioneer Concrete Philippines, Inc. v. Todaro, 551 Phil.
589, 599 (2007) [Per J. Austria-Martinez, Third 74Pacific Consultants International Asia, Inc. v.
Division], citing Bank of America, NT&SA, Bank of Schonfeld, 545 Phil. 116, 136 (2007) [Per J. Callejo, Sr.,
America International, Ltd. v. Court of Appeals, 448 Third Division], citing Philsec Investment Corporation v.
Phil. 181 (2003) [Per J. Austria-Martinez, Second Court of Appeals, 340 Phil. 232, 242 (1997) [Per J.
Division]. Mendoza, Second Division].

63First Philippine International Bank v. Court of 78 CIVIL CODE, art. 1306.

Appeals, 322 Phil. 280, 303 (1996) [Per J. Panganiban,
Third Division]. 78 CIVIL CODE, art. 1306.

64See Malayang Samahan ng Manggagawa sa Balanced 78 CIVIL CODE, art. 1306.

Food v. Pinakamasarap Corporation, 464 Phil. 998,
1000-1001 (2004) [Per J. Sandoval-Gutierrez, Third 79 268 Phil. 92 (1990) [Per J. Feliciano, Third Division].
Division], citing Arenas vs. Court of Appeals, 399 Phil.
372 (2000) [Per J. Pardo, First Division]: 80 Id. at 101.

"The doctrine of res judicata is a rule which pervades 81Also signed and ratified by the Kingdom of Saudi
every well regulated system of jurisprudence and is Arabia. See United Nations Treaty Collection.
founded upon two grounds embodied in various maxims
of the common law, namely: (1) public policy and 82Convention on the Elimination of all Forms of
necessity which makes it to the interest of the State that Discrimination Against Women, July 15, 1980 (1981), 1-
there should be an end to litigation, interest reipublicae 1 U.N.T.S. 16.
ut sit finis litumi; and (2) the hardship on the individual
that he should be vexed twice for the same cause, memo 83 268 Phil. 92 (1990) [Per J. Feliciano, Third Division].
debet bis vexari et eadem causa."
84 Id. at 104-105.
65GEORGE A. BERMANN, TRANSNATIONAL LITIGATION
IN A NUTSHELL 87 (2003). 85 340 Phil. 232 (1997) [Per J. Mendoza, Second

43
Division]. are attached as Annexes "F" to "J," "EE," "DDD," "GGGG"
to "JJJJ" of Respondents' Comment.
86 570 Phil. 151 (2008) [Per J. Tinga, Second Division].
110 Id. at 609 and 617.
87 561 Phil. 688 (2007) [Per J. Carpio, Second Division].
Id. at 736-740. The Unified Contract is attached as
111
88 Id. at 700. Annex "ZZ" of Respondents' Comment.

89545 Phil. 116 (2007) [Per J. Callejo, Sr., Third 112 Id. at 739.
Division].
113 Id. at 610, 715, and 750.
90448 Phil. 181 (2003) [Per J. Austria-Martinez, Second
Division]. 114DusitHotel Nikko v. Galbonton, 523 Phil. 338; 344
(2006) [Per J. Quisumbing, Third Division], citing
91 397 Phil. 1 (2000) [Per J. Pardo, First Division]. Sameer Overseas Placement Agency, Inc. v. NLRC, 375
Phil. 535 (1999) [Per J. Pardo, First Division]
92405 Phil. 413 (2001) [Per J. Panganiban, Third
Division]. 115Rollo, pp. 28, 32, and 35.

93Puyatv. Zabarte, 405 Phil. 413, 432 (2001) [Per J. 116 Id. at 28.
Panganiban, Third Division], citingJOVITO R. SALONGA,
PRIVATE INTERNATIONAL LAW 47 (1979 ed.). 117 Id. at 31.

94405 Phil. 413 (2001) [Per J. Panganiban, Third 118471 Phil. 753 (2004) [Per J. Callejo, Sr., Second
Division]. Division].

95448 Phil. 181 (2003) [Per J. Austria-Martinez, Second 119Id. at 780, citing Dole Philippines, Inc. v. Court of
Division]. Appeals, 417 Phil. 428 (2001) [Per J. Kapunan, First
Division].
96405 Phil. 413, 432 (2001) [Per J. Panganiban, Third
Division], citing JOVITO R. SALONGA, PRIVATE 120San Miguel Properties Philippines, Inc. v. Gucaban,
INTERNATIONAL LAW 47 (1979 ed.). (Underscoring G.R. No. 153982, July 18, 2011, 654 SCRA 18, A 33 [Per J.
supplied) Peralta, Third Division], citing Mayon Hotel and
Restaurant v. Adana, 497 Phil. 892, 922 (2005) [Per J.
97448 Phil. 181, 196 (2003) [Per J. Austria-Martinez, Puno, Second Division]; Litonjua Group of Companies v.
Second Division], citing Communication Materials and Vigan, All Phil. 627, 643 (2001) [Per J. Gonzaga-Reyes,
Design, Inc. v. Court of Appeals, 329 Phil. 487 (1996) Third Division]; Equitable Banking Corp. v. NLRC, 339
[Per J. Torres, Jr., Second Division]. Phil. 541, 565 (1997) [Per J. Vitug, First
Division]; Airline Pilots Association of the Philippines v.
98 Id. NLRC, 328 Phil. 814, 830 (1996) [Per J. Francisco, Third
Division]; and Maglutac v. NLRC, G.R. Nos. 78345 and
99Rollo, p. 637. 78637, September 21, 1990, 189 SCRA 767, [Per J.
Peralta, Third Division].
100448 Phil. 181 (2003) [Per J. Austria-Martinez, Second
Division]. 121 CIVIL CODE. Art. 2229.

101G.R. No. 183915, December 14, 2011, 662 SCR A 540 122Quadra v. Court of Appeals, 529 Phil. 218 (2006) [Per
[Per J. Leonardo-De Castro, First Division]. J. Puno, Second Division].

Id. at 549, citing BMG Records (Phils.), Inc. v.

102 123Id.; Nueva Ecija I Electric Cooperative, Inc.
Aparecio, 559 Phil. 80 [Per J. Azcuna, First Division]. Employees Association, et al. v. NLRC, 380 Phil. 45
(2000) [Per J. Quisumbing, Second Division].
103 Id. at 549.
124U-Bix Corporation v. Bandiola, 552 Phil. 633 (2007)
104Morales v. Harbour Centre Port Terminal G.R. No. [Per J. Chico-Nazario, Third Division].
174208, January 25, 2012, 664 SCRA 110, 117 [Per J.
Perez, Second Division], citing Globe Telecom, Inc. v. 125TripleEight Integrated Services, Inc. v. NLRC, 359
Florendo-Flores, 438 Phil. 756, 766 (2002) [Per J. Phil. 955 (1998) [Per J. Romero, Third Division].
Bellosillo, Second Division].
126Estiva v. NLRC, G.R. No. 95145, August 5, 1993, 225
105 632 Phil. 221 (2010) [Per J. Brion, Second Division]. SCRA 169 [Per J. Bidin, Third Division].

106 Id. at 226. 127Kay Lee v. Court of Appeals, 502 Phil. 783 (2005) [Per
J. Callejo, Sr., Second Division].
107Id., citing Siemens Philippines, Inc. v. Domingo, 582
Phil. 86 (2008) [Per J. Nachura, Third Division]. 128Montinola v. PAL, G.R. No. 198656, September 8, 2014
[Per J. Leonen, Second Division].
108Rollo, p. 72.
129CONST., art. II, sec. 14: The State recognizes the role
109 Id. at 684-688, 714, 749, and 823-828. These letters of women in nation-building, and shall ensure the

44
fundamental equality before the law of women and men.
130Aliling
v. Manuel, G.R. No. 185829, April 25, 2012, 671
SCRA 186, 220 [Per J. Velasco, Third Division], citing
Exodus International Construction Corporation v.
Biscocho, 659 Phil. 142 (2011) [Per J. Del Castillo, First
Division] and Lambert Pawnbrokers and Jewelry
Corporation G.R. No. 170464, July 12, 2010, 624 SCRA
705, 721 [Per.). Del Castillo, First Division].
131Ever Electrical Manufacturing, Inc. (EEMI) v.
Samahang Manggagawa ng Ever Electrical, G.R. No.
194795, June 13, 2012, 672 SCRA 562, 572 [Per J.
Mendoza, Third Division], citing Malayang Samahan ng
mga Manggagawa sa M. Greenfield v. Ramos, 409 Phil.
75, 83 (2001) [Per J. Gonzaga-Reyes, Third Division].
132 Id.
133 Id.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 162894 February 26, 2008
RAYTHEON INTERNATIONAL, INC., petitioner,
vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J.:
Before this Court is a petition for review on certiorari
under Rule 45 of the 1997 Rules of Civil Procedure
which seeks the reversal of the Decision1 and
Resolution2 of the Court of Appeals in CA-G.R. SP No.
67001 and the dismissal of the civil case filed by
respondent against petitioner with the trial court.
As culled from the records of the case, the following
antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI),
a corporation duly organized and existing under the
laws of the State of Connecticut, United States of
America, and respondent Stockton W. Rouzie, Jr., an
American citizen, entered into a contract whereby
BMSI hired respondent as its representative to
negotiate the sale of services in several government
projects in the Philippines for an agreed remuneration
of 10% of the gross receipts. On 11 March 1992,
respondent secured a service contract with the
Republic of the Philippines on behalf of BMSI for the
dredging of rivers affected by the Mt. Pinatubo
eruption and mudflows.3
On 16 July 1994, respondent filed before the
Arbitration Branch of the National Labor Relations
Commission (NLRC) a suit against BMSI and Rust
International, Inc. (RUST), Rodney C. Gilbert and
Walter G. Browning for alleged nonpayment of
commissions, illegal termination and breach of
employment contract.4 On 28 September 1995, Labor
Arbiter Pablo C. Espiritu, Jr. rendered judgment
ordering BMSI and RUST to pay respondent’s money
claims.5 Upon appeal by BMSI, the NLRC reversed the
decision of the Labor Arbiter and dismissed
respondent’s complaint on the ground of lack of
jurisdiction.6 Respondent elevated the case to this
Court but was dismissed in a Resolution dated 26
November 1997. The Resolution became final and
executory on 09 November 1998.
On 8 January 1999, respondent, then a resident of La
Union, instituted an action for damages before the
Regional Trial Court (RTC) of Bauang, La Union. The
Complaint,7 docketed as Civil Case No. 1192-BG,
named as defendants herein petitioner Raytheon
International, Inc. as well as BMSI and RUST, the two
corporations impleaded in the earlier labor case. The
complaint essentially reiterated the allegations in the
labor case that BMSI verbally employed respondent to
negotiate the sale of services in government projects
and that respondent was not paid the commissions
due him from the Pinatubo dredging project which he
secured on behalf of BMSI. The complaint also averred
that BMSI and RUST as well as petitioner itself had
combined and functioned as one company.
In its Answer,8 petitioner alleged that contrary to
respondent’s claim, it was a foreign corporation duly
licensed to do business in the Philippines and denied
entering into any arrangement with respondent or
paying the latter any sum of money. Petitioner also
denied combining with BMSI and RUST for the
purpose of assuming the alleged obligation of the said
companies.9 Petitioner also referred to the NLRC
decision which disclosed that per the written
agreement between respondent and BMSI and RUST,
denominated as "Special Sales Representative
Agreement," the rights and obligations of the parties
shall be governed by the laws of the State of
Connecticut.10 Petitioner sought the dismissal of the
complaint on grounds of failure to state a cause of
action and forum non conveniens and prayed for
damages by way of compulsory counterclaim.11
On 18 May 1999, petitioner filed an Omnibus Motion
for Preliminary Hearing Based on Affirmative
Defenses and for Summary Judgment12 seeking the
dismissal of the complaint on grounds of forum non
conveniens and failure to state a cause of action.
Respondent opposed the same. Pending the resolution
of the omnibus motion, the deposition of Walter
Browning was taken before the Philippine Consulate
General in Chicago.13
In an Order14 dated 13 September 2000, the RTC
denied petitioner’s omnibus motion. The trial court
held that the factual allegations in the complaint,
assuming the same to be admitted, were sufficient for
the trial court to render a valid judgment thereon. It
also ruled that the principle of forum non
conveniens was inapplicable because the trial court
could enforce judgment on petitioner, it being a
foreign corporation licensed to do business in the
Philippines.15
45
Petitioner filed a Motion for Reconsideration16 of the
order, which motion was opposed by respondent.17 In
an Order dated 31 July 2001,18 the trial court denied
petitioner’s motion. Thus, it filed a Rule 65
Petition19 with the Court of Appeals praying for the
issuance of a writ of certiorari and a writ of injunction
to set aside the twin orders of the trial court dated 13
September 2000 and 31 July 2001 and to enjoin the
trial court from conducting further proceedings.20
On 28 August 2003, the Court of Appeals rendered the
assailed Decision21 denying the petition for certiorari
for lack of merit. It also denied petitioner’s motion for
reconsideration in the assailed Resolution issued on
10 March 2004.22
The appellate court held that although the trial court
should not have confined itself to the allegations in the
complaint and should have also considered
evidence aliunde in resolving petitioner’s omnibus
motion, it found the evidence presented by petitioner,
that is, the deposition of Walter Browning, insufficient
for purposes of determining whether the complaint
failed to state a cause of action. The appellate court
also stated that it could not rule one way or the other
on the issue of whether the corporations, including
petitioner, named as defendants in the case had
indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue
should be threshed out during trial.23 Moreover, the
appellate court deferred to the discretion of the trial
court when the latter decided not to desist from
assuming jurisdiction on the ground of the
inapplicability of the principle of forum non
conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS
ERRED IN REFUSING TO DISMISS THE
COMPLAINT FOR FAILURE TO STATE A
CAUSE OF ACTION AGAINST RAYTHEON
INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS
ERRED IN REFUSING TO DISMISS THE
COMPLAINT ON THE GROUND OF FORUM
NON CONVENIENS.24
Incidentally, respondent failed to file a comment
despite repeated notices. The Ceferino Padua Law
Office, counsel on record for respondent, manifested
that the lawyer handling the case, Atty. Rogelio
Karagdag, had severed relations with the law firm
even before the filing of the instant petition and that it
could no longer find the whereabouts of Atty.
Karagdag or of respondent despite diligent efforts. In a
Resolution25 dated 20 November 2006, the Court
resolved to dispense with the filing of a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract
between respondent and BMSI included a valid choice
of law clause, that is, that the contract shall be
governed by the laws of the State of Connecticut. It
also mentions the presence of foreign elements in the
dispute – namely, the parties and witnesses involved
are American corporations and citizens and the
evidence to be presented is located outside the
Philippines – that renders our local courts
inconvenient forums. Petitioner theorizes that the
foreign elements of the dispute necessitate the
immediate application of the doctrine of forum non
conveniens.
Recently in Hasegawa v. Kitamura,26 the Court outlined
three consecutive phases involved in judicial
resolution of conflicts-of-laws problems, namely:
jurisdiction, choice of law, and recognition and
enforcement of judgments. Thus, in the
instances27 where the Court held that the local judicial
machinery was adequate to resolve controversies with
a foreign element, the following requisites had to be
proved: (1) that the Philippine Court is one to which
the parties may conveniently resort; (2) that the
Philippine Court is in a position to make an intelligent
decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have the power to
enforce its decision.28
On the matter of jurisdiction over a conflicts-of-laws
problem where the case is filed in a Philippine court
and where the court has jurisdiction over the subject
matter, the parties and the res, it may or can proceed
to try the case even if the rules of conflict-of-laws or
the convenience of the parties point to a foreign
forum. This is an exercise of sovereign prerogative of
the country where the case is filed.29
Jurisdiction over the nature and subject matter of an
action is conferred by the Constitution and the
law30 and by the material allegations in the complaint,
irrespective of whether or not the plaintiff is entitled
to recover all or some of the claims or reliefs sought
therein.31 Civil Case No. 1192-BG is an action for
damages arising from an alleged breach of contract.
Undoubtedly, the nature of the action and the amount
of damages prayed are within the jurisdiction of the
RTC.
As regards jurisdiction over the parties, the trial court
acquired jurisdiction over herein respondent (as party
plaintiff) upon the filing of the complaint. On the other
hand, jurisdiction over the person of petitioner (as
party defendant) was acquired by its voluntary
appearance in court.32
That the subject contract included a stipulation that
the same shall be governed by the laws of the State of
Connecticut does not suggest that the Philippine
courts, or any other foreign tribunal for that matter,
are precluded from hearing the civil action.
Jurisdiction and choice of law are two distinct
concepts. Jurisdiction considers whether it is fair to
cause a defendant to travel to this state; choice of law
asks the further question whether the application of a
substantive law which will determine the merits of the
case is fair to both parties.33 The choice of law
stipulation will become relevant only when the
substantive issues of the instant case develop, that is,
after hearing on the merits proceeds before the trial
court.
Under the doctrine of forum non conveniens, a court, in
conflicts-of-laws cases, may refuse impositions on its
jurisdiction where it is not the most "convenient" or
available forum and the parties are not precluded
46
from seeking remedies elsewhere.34 Petitioner’s evidence, which only a full-blown trial on the merits
averments of the foreign elements in the instant case can afford.
are not sufficient to oust the trial court of its
jurisdiction over Civil Case No. No. 1192-BG and the WHEREFORE, the instant petition for review on
parties involved. certiorari is DENIED. The Decision and Resolution of
the Court of Appeals in CA-G.R. SP No. 67001 are
Moreover, the propriety of dismissing a case based on hereby AFFIRMED. Costs against petitioner.
the principle of forum non conveniens requires a
factual determination; hence, it is more properly SO ORDERED.
considered as a matter of defense. While it is within
the discretion of the trial court to abstain from DANTE O. TINGA
assuming jurisdiction on this ground, it should do so Associate Justice
only after vital facts are established, to determine
whether special circumstances require the court’s
desistance.35

Finding no grave abuse of discretion on the trial court,

the Court of Appeals respected its conclusion that it WE CONCUR:
can assume jurisdiction over the dispute
notwithstanding its foreign elements. In *ANTONIO
the same T.
manner, the Court defers to the sound discretion of the
Associate
lower courts because their findings are binding on this
Acting Chairperson
Court.
**ANGELINA SANDOVAL-GUTIERREZ CONCHITA CARPIO M
Petitioner also contends that the complaint Associate
in CivilJustice Associate Justice
Case No. 1192-BG failed to state a cause of action
against petitioner. Failure to state a cause PRESBITERO
of action J. VELASCO,
refers to the insufficiency of allegationAssociate
in theJustice
pleading.36 As a general rule, the elementary test for
failure to state a cause of action is whether the
complaint alleges facts which if true would justify the
relief demanded.37
ATTESTATION
The complaint alleged that petitioner had combined
with BMSI and RUST to function as one company. I attest that the conclusions in the above Decision had
Petitioner contends that the deposition of Walter been reached in consultation before the case was
Browning rebutted this allegation. On this score, the assigned to the writer of the opinion of the Court’s
resolution of the Court of Appeals is instructive, thus: Division.

x x x Our examination of the deposition of Mr. ANTONIO T. CARPIO

Walter Browning as well as other documents Associate Justice
produced in the hearing shows that these Acting Chairperson
evidence aliunde are not quite sufficient for us
to mete a ruling that the complaint fails to
state a cause of action.

Annexes "A" to "E" by themselves are not CERTIFICATION

substantial, convincing and conclusive proofs
that Raytheon Engineers and Constructors, Pursuant to Section 13, Article VIII of the Constitution,
Inc. (REC) assumed the warranty obligations and the Division Chairperson’s Attestation, it is hereby
of defendant Rust International in the Makar certified that the conclusions in the above Decision
Port Project in General Santos City, after Rust had been reached in consultation before the case was
International ceased to exist after being assigned to the writer of the opinion of the Court’s
absorbed by REC. Other documents already Division.
submitted in evidence are likewise meager to
preponderantly conclude that Raytheon REYNATO S. PUNO
International, Inc., Rust International[,] Inc. Chief Justice
and Brand Marine Service, Inc. have combined
into one company, so much so that Raytheon
International, Inc., the surviving company (if
at all) may be held liable for the obligation of
BMSI to respondent Rouzie for unpaid
commissions. Neither these documents clearly Footnotes
speak otherwise.38
* Acting Chairperson.
As correctly pointed out by the Court of Appeals, the
question of whether petitioner, BMSI and RUST ** As replacement of Justice Leonardo A.
merged together requires the presentation of further Quisumbing who inhibited himself per
Administrative Circular No. 84-2007.

47
1 Rollo, pp. 42-46. Dated 28 August 2003;
penned by Associate Justice Arsenio J.
Magpale and concurred in by Associate
Justices Bienvenido L. Reyes, Acting
Chairperson of the Special Ninth Division, and
Rebecca De Guia-Salvador.
2 Id. at 47. Dated 10 March 2004.
3 Id. at 48-49.
4 Id. at 61-62.
Design, Inc. v. CA, 329 Phil. 487, 510-511
(1996).
29Agpalo, Ruben E. CONFLICT OF LAWS
(Private International Law), 2004 Ed., p. 491.
30 Heirs of Julian Dela Cruz and Leonora Talaro
v. Heirs of Alberto Cruz, G.R. No. 162890, 22
November 2005, 475 SCRA 743, 756.
Laresma v. Abellana, G.R. No. 140973, 11
31
November 2004, 442 SCRA 156, 168.

5 Id. at 63-74. 32See Arcelona v. CA, 345 Phil. 250, 267

(1997).
6 Id. at 75-90.
33 Hasegawa v. Kitamura, supra note 26.
7 Id. at 48-54.
34Bank of America NT & SA v. Court of Appeals,
8 Id. at 91-99. supra note 27.

9 Id. at 94. 35Philsec Investment Corporation v. Court of

Appeals, supra note 27 at 113.
10 Id. at 96.
36Bank of America NT & SA v. Court of
11 Id. at 97-98. Appeals, supra note 27 at 194.

12 Id. at 100-111.
37Banco Filipino Savings and Mortgage Bank v.
Court of Appeals, G.R. No. 143896, 8 July 2005,
463 SCRA 64, 73.
13 Records, Vol. I, pp. 180-238.
38 Rollo, p. 44.
14 Rollo, pp. 127-131.

15 Id. at 130.
The Lawphil Project - Arellano Law Foundation
16 Id. at 132-149.

17 Id. at 150-151.
Republic of the Philippines
SUPREME COURT
18 Id. at 162.
Manila
19 Id. at 163-192.
SECOND DIVISION
20 Id. at 191.
G.R. No. 145587 October 26, 2007
21 Supra note 1.
EDI-STAFFBUILDERS INTERNATIONAL,
INC., petitioner,
22 Supra note 2. vs.
NATIONAL LABOR RELATIONS COMMISSION and
23 Id. at 44. ELEAZAR S. GRAN, respondents.

24 Id. at 18. DECISION

25 Id. at 318. VELASCO, JR., J.:

26 G.R. No. 149177, 23 November 2007. The Case

27Bank of America NT & SA v. Court of Appeals,
448 Phil. 181 (2003); Puyat v. Zabarte, 405
Phil. 413 (2001); Philsec Investment
Corporation v. Court of Appeals, G.R. No.
103493, 19 June 1997, 274 SCRA 102.
28The Manila Hotel Corp. v. NLRC, 397 Phil. 1,
16-17 (2000); Communication Materials and
This Petition for Review on Certiorari1 seeks to set
aside the October 18, 2000 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 56120 which affirmed
the January 15, 1999 Decision3 and September 30,
1999 Resolution4 rendered by the National Labor
Relations Commission (NLRC) (Third Division) in
POEA ADJ (L) 94-06-2194, ordering Expertise Search
International (ESI), EDI-Staffbuilders International,

48
Inc. (EDI), and Omar Ahmed Ali Bin Bechr Est. (OAB)
jointly and severally to pay Eleazar S. Gran (Gran) the
amount of USD 16,150.00 as unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment
and placement of Overseas Filipino Workers
(OFWs).5 ESI is another recruitment agency which
collaborated with EDI to process the documentation
and deployment of private respondent to Saudi Arabia.
Private respondent Gran was an OFW recruited by
EDI, and deployed by ESI to work for OAB, in Riyadh,
Kingdom of Saudi Arabia.6
It appears that OAB asked EDI through its October 3,
1993 letter for curricula vitae of qualified applicants
for the position of "Computer Specialist."7 In a
facsimile transmission dated November 29, 1993, OAB
informed EDI that, from the applicants' curricula
vitae submitted to it for evaluation, it selected Gran for
the position of "Computer Specialist." The faxed letter
also stated that if Gran agrees to the terms and
conditions of employment contained in it, one of which
was a monthly salary of SR (Saudi Riyal) 2,250.00
(USD 600.00), EDI may arrange for Gran's immediate
dispatch.8
After accepting OAB's offer of employment, Gran
signed an employment contract9 that granted him a
monthly salary of USD 850.00 for a period of two
years. Gran was then deployed to Riyadh, Kingdom of
Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the
discrepancy in his monthly salary—his employment
contract stated USD 850.00; while his Philippine
Overseas Employment Agency (POEA) Information
Sheet indicated USD 600.00 only. However, through
the assistance of the EDI office in Riyadh, OAB agreed
to pay Gran USD 850.00 a month.10
After Gran had been working for about five months for
OAB, his employment was terminated through OAB's
July 9, 1994 letter,11 on the following grounds:
1. Non-compliance to contract requirements
by the recruitment agency primarily on your
salary and contract duration.
2. Non-compliance to pre-qualification
requirements by the recruitment agency[,]
vide OAB letter ref. F-5751-93, dated October
3, 1993.12
3. Insubordination or disobedience to Top
Management Order and/or instructions (non-
submittal of daily activity reports despite
several instructions).
On July 11, 1994, Gran received from OAB the total
amount of SR 2,948.00 representing his final pay, and
on the same day, he executed a Declaration13 releasing
OAB from any financial obligation or otherwise,
towards him.
After his arrival in the Philippines, Gran instituted a
complaint, on July 21, 1994, against ESI/EDI, OAB,
Country Bankers Insurance Corporation, and Western
Guaranty Corporation with the NLRC, National Capital
Region, Quezon City, which was docketed as POEA ADJ
(L) 94-06-2194 for underpayment of wages/salaries
and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision,14 Labor Arbiter
Manuel R. Caday, to whom Gran's case was assigned,
ruled that there was neither underpayment nor illegal
dismissal.
The Labor Arbiter reasoned that there was no
underpayment of salaries since according to the POEA-
Overseas Contract Worker (OCW) Information Sheet,
Gran's monthly salary was USD 600.00, and in his
Confirmation of Appointment as Computer Specialist,
his monthly basic salary was fixed at SR 2,500.00,
which was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by
Gran, to justify that Gran had no claim for unpaid
salaries or wages against OAB.
With regard to the issue of illegal dismissal, the Labor
Arbiter found that Gran failed to refute EDI's
allegations; namely, (1) that Gran did not submit a
single activity report of his daily activity as dictated by
company policy; (2) that he was not qualified for the
job as computer specialist due to his insufficient
knowledge in programming and lack of knowledge in
ACAD system; (3) that Gran refused to follow
management's instruction for him to gain more
knowledge of the job to prove his worth as computer
specialist; (4) that Gran's employment contract had
never been substituted; (5) and that Gran was paid a
monthly salary of USD 850.00, and USD 350.00
monthly as food allowance.
Accordingly, the Labor Arbiter decided that Gran was
validly dismissed from his work due to
insubordination, disobedience, and his failure to
submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed
Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal15 on April 6, 1998
with the NLRC, Third Division. However, it appears
from the records that Gran failed to furnish EDI with a
copy of his Appeal Memorandum.
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer
of Gran's contract to ESI is actually "reprocessing,"
which is a prohibited transaction under Article 34 (b)
of the Labor Code. This scheme constituted
misrepresentation through the conspiracy between
EDI and ESI in misleading Gran and even POEA of the
actual terms and conditions of the OFW's employment.
In addition, it was found that Gran did not commit any
act that constituted a legal ground for dismissal. The
alleged non-compliance with contractual stipulations
relating to Gran's salary and contract duration, and the
49
absence of pre-qualification requirements cannot be
attributed to Gran but to EDI, which dealt directly with
OAB. In addition, the charge of insubordination was
not substantiated, and Gran was not even afforded the
required notice and investigation on his alleged
offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision
and rendered a new one, the dispositive portion of
which reads:
WHEREFORE, the assailed decision is SET
ASIDE. Respondents Expertise Search
International, Inc., EDI Staffbuilders Int'l., Inc.
and Omar Ahmed Ali Bin Bechr Est. (OAB) are
hereby ordered jointly and severally liable to
pay the complainant Eleazar Gran the
Philippine peso equivalent at the time of
actual payment of SIXTEEN THOUSAND ONE
HUNDRED FIFTY US DOLLARS
(US$16,150.00) representing his salaries for
the unexpired portion of his contract.
SO ORDERED.16
Gran then filed a Motion for Execution of
Judgment17 on March 29, 1999 with the NLRC and
petitioner receiving a copy of this motion on the same
date.18
To prevent the execution, petitioner filed an
Opposition19 to Gran's motion arguing that the Writ of
Execution cannot issue because it was not notified of
the appellate proceedings before the NLRC and was
not given a copy of the memorandum of appeal nor
any opportunity to participate in the appeal.
Seeing that the NLRC did not act on Gran's motion
after EDI had filed its Opposition, petitioner filed, on
August 26, 1999, a Motion for Reconsideration of the
NLRC Decision after receiving a copy of the Decision
on August 16, 1999.20
The NLRC then issued a Resolution21 denying
petitioner's Motion for Reconsideration, ratiocinating
that the issues and arguments raised in the motion
"had already been amply discussed, considered, and
ruled upon" in the Decision, and that there was "no
cogent reason or patent or palpable error that warrant
any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a
Petition for Certiorari before the CA. Petitioner
claimed in its petition that the NLRC committed grave
abuse of discretion in giving due course to the appeal
despite Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and
substantive issues of EDI's petition.
On the procedural issue, the appellate court held that
"Gran's failure to furnish a copy of his appeal
memorandum [to EDI was] a mere formal lapse, an
excusable neglect and not a jurisdictional defect which
would justify the dismissal of his appeal."22 The court
also held that petitioner EDI failed to prove that
private respondent was terminated for a valid cause
and in accordance with due process; and that Gran's
Declaration releasing OAB from any monetary
obligation had no force and effect. The appellate court
ratiocinated that EDI had the burden of proving Gran's
incompetence; however, other than the termination
letter, no evidence was presented to show how and
why Gran was considered to be incompetent. The
court held that since the law requires the recruitment
agencies to subject OFWs to trade tests before
deployment, Gran must have been competent and
qualified; otherwise, he would not have been hired
and deployed abroad.
As for the charge of insubordination and disobedience
due to Gran's failure to submit a "Daily Activity
Report," the appellate court found that EDI failed to
show that the submission of the "Daily Activity
Report" was a part of Gran's duty or the company's
policy. The court also held that even if Gran was guilty
of insubordination, he should have just been
suspended or reprimanded, but not dismissed.
The CA also held that Gran was not afforded due
process, given that OAB did not abide by the twin
notice requirement. The court found that Gran was
terminated on the same day he received the
termination letter, without having been apprised of
the bases of his dismissal or afforded an opportunity
to explain his side.
Finally, the CA held that the Declaration signed by
Gran did not bar him from demanding benefits to
which he was entitled. The appellate court found that
the Declaration was in the form of a quitclaim, and as
such is frowned upon as contrary to public policy
especially where the monetary consideration given in
the Declaration was very much less than what he was
legally entitled to—his backwages amounting to USD
16,150.00.
As a result of these findings, on October 18, 2000, the
appellate court denied the petition to set aside the
NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our
consideration:
I. WHETHER THE FAILURE OF GRAN TO
FURNISH A COPY OF HIS APPEAL
MEMORANDUM TO PETITIONER EDI WOULD
CONSTITUTE A JURISDICTIONAL DEFECT
AND A DEPRIVATION OF PETITIONER EDI'S
RIGHT TO DUE PROCESS AS WOULD JUSTIFY
THE DISMISSAL OF GRAN'S APPEAL.
II. WHETHER PETITIONER EDI HAS
ESTABLISHED BY WAY OF SUBSTANTIAL
EVIDENCE THAT GRAN'S TERMINATION WAS
JUSTIFIABLE BY REASON OF
INCOMPETENCE. COROLLARY HERETO,
WHETHER THE PRIETO VS. NLRC RULING, AS
APPLIED BY THE COURT OF APPEALS, IS
APPLICABLE IN THE INSTANT CASE.
50
 III. WHETHER PETITIONER HAS
ESTABLISHED BY WAY OF SUBSTANTIAL
EVIDENCE THAT GRAN'S TERMINATION WAS
JUSTIFIABLE BY REASON OF
INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE
PROCESS PRIOR TO TERMINATION.
V. WHETHER GRAN IS ENTITLED TO
BACKWAGES FOR THE UNEXPIRED PORTION
OF HIS CONTRACT.23
The Court's Ruling
The petition lacks merit except with respect to Gran's
failure to furnish EDI with his Appeal Memorandum
filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent
to Provide Petitioner a Copy of the Appeal
Petitioner EDI claims that Gran's failure to furnish it a
copy of the Appeal Memorandum constitutes a
jurisdictional defect and a deprivation of due process
that would warrant a rejection of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of
appellant to furnish a copy of the appeal to the
adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations
Commission,24 this Court set aside the order of the
NLRC which dismissed an appeal on the sole ground
that the appellant did not furnish the appellee a
memorandum of appeal contrary to the requirements
of Article 223 of the New Labor Code and Section 9,
Rule XIII of its Implementing Rules and Regulations.
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC,
the order of dismissal of an appeal to the NLRC based
on the ground that "there is no showing whatsoever
that a copy of the appeal was served by the appellant on
the appellee"25was annulled. The Court ratiocinated as
follows:
The failure to give a copy of the appeal to the
adverse party was a mere formal lapse, an
excusable neglect. Time and again We have
acted on petitions to review decisions of the
Court of Appeals even in the absence of proof
of service of a copy thereof to the Court of
Appeals as required by Section 1 of Rule 45,
Rules of Court. We act on the petitions and
simply require the petitioners to comply
with the rule.26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation
Philippines Employees Labor Union-FFW v. National
Labor Relations Commission,27 Pagdonsalan v.
NLRC, and in Sunrise Manning Agency, Inc. v. NLRC.29
28
Thus, the doctrine that evolved from these cases is
that failure to furnish the adverse party with a copy of
the appeal is treated only as a formal lapse, an
excusable neglect, and hence, not a jurisdictional
defect. Accordingly, in such a situation, the appeal
should not be dismissed; however, it should not be
given due course either. As enunciated in J.D.
Magpayo, the duty that is imposed on the NLRC, in
such a case, is to require the appellant to comply
with the rule that the opposing party should be
provided with a copy of the appeal memorandum.
While Gran's failure to furnish EDI with a copy of the
Appeal Memorandum is excusable, the abject failure of
the NLRC to order Gran to furnish EDI with the Appeal
Memorandum constitutes grave abuse of discretion.
The records reveal that the NLRC discovered that Gran
failed to furnish EDI a copy of the Appeal
Memorandum. The NLRC then ordered Gran to
present proof of service. In compliance with the order,
Gran submitted a copy of Camp Crame Post Office's list
of mail/parcels sent on April 7, 1998.30 The post
office's list shows that private respondent Gran sent
two pieces of mail on the same date: one addressed to
a certain Dan O. de Guzman of Legaspi Village, Makati;
and the other appears to be addressed to Neil B. Garcia
(or Gran),31 of Ermita, Manila—both of whom are not
connected with petitioner.
This mailing list, however, is not a conclusive proof
that EDI indeed received a copy of the Appeal
Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides
for the proof and completeness of service in
proceedings before the NLRC:
Section 5.32 Proof and completeness of
service.—The return is prima facie proof of
the facts indicated therein. Service by
registered mail is complete upon receipt
by the addressee or his agent; but if the
addressee fails to claim his mail from the post
office within five (5) days from the date of
first notice of the postmaster, service shall
take effect after such time. (Emphasis
supplied.)
Hence, if the service is done through registered mail, it
is only deemed complete when the addressee or his
agent received the mail or after five (5) days from the
date of first notice of the postmaster. However, the
NLRC Rules do not state what would constitute proper
proof of service.
Sec. 13, Rule 13 of the Rules of Court, provides for
proofs of service:
Section 13. Proof of service.—Proof of
personal service shall consist of a written
admission of the party served or the official
return of the server, or the affidavit of the
party serving, containing a full statement of
the date, place and manner of service. If the
service is by ordinary mail, proof thereof shall
consist of an affidavit of the person mailing of
facts showing compliance with section 7 of
this Rule. If service is made by registered
mail, proof shall be made by such affidavit
and registry receipt issued by the mailing
office. The registry return card shall be
filed immediately upon its receipt by the
51
 sender, or in lieu thereof the unclaimed
letter together with the certified or sworn
copy of the notice given by the postmaster
to the addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the
list submitted by Gran is not conclusive proof that he
had served a copy of his appeal memorandum to EDI,
nor is it conclusive proof that EDI received its copy of
the Appeal Memorandum. He should have submitted
an affidavit proving that he mailed the Appeal
Memorandum together with the registry receipt
issued by the post office; afterwards, Gran should have
immediately filed the registry return card.
Hence, after seeing that Gran failed to attach the proof
of service, the NLRC should not have simply accepted
the post office's list of mail and parcels sent; but it
should have required Gran to properly furnish the
opposing parties with copies of his Appeal
Memorandum as prescribed in J.D. Magpayo and
the other cases. The NLRC should not have proceeded
with the adjudication of the case, as this
constitutes grave abuse of discretion.
The glaring failure of NLRC to ensure that Gran should
have furnished petitioner EDI a copy of the Appeal
Memorandum before rendering judgment reversing
the dismissal of Gran's complaint constitutes an
evasion of the pertinent NLRC Rules and established
jurisprudence. Worse, this failure deprived EDI of
procedural due process guaranteed by the
Constitution which can serve as basis for the
nullification of proceedings in the appeal before the
NLRC. One can only surmise the shock and dismay that
OAB, EDI, and ESI experienced when they thought that
the dismissal of Gran's complaint became final, only to
receive a copy of Gran's Motion for Execution of
Judgment which also informed them that Gran had
obtained a favorable NLRC Decision. This is not level
playing field and absolutely unfair and discriminatory
against the employer and the job recruiters. The rights
of the employers to procedural due process cannot be
cavalierly disregarded for they too have rights assured
under the Constitution.
However, instead of annulling the dispositions of the
NLRC and remanding the case for further proceedings
we will resolve the petition based on the records
before us to avoid a protracted litigation.33
The second and third issues have a common matter—
whether there was just cause for Gran's dismissal—
hence, they will be discussed jointly.
Second and Third Issues: Whether Gran's
dismissal is justifiable by reason of incompetence,
insubordination, and disobedience
In cases involving OFWs, the rights and obligations
among and between the OFW, the local
recruiter/agent, and the foreign employer/principal
are governed by the employment contract. A contract
freely entered into is considered law between the
parties; and hence, should be respected. In formulating
the contract, the parties may establish such
stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to
law, morals, good customs, public order, or public
policy.34
In the present case, the employment contract signed
by Gran specifically states that Saudi Labor Laws will
govern matters not provided for in the contract (e.g.
specific causes for termination, termination
procedures, etc.). Being the law intended by the
parties (lex loci intentiones) to apply to the contract,
Saudi Labor Laws should govern all matters relating to
the termination of the employment of Gran.
In international law, the party who wants to have a
foreign law applied to a dispute or case has the burden
of proving the foreign law. The foreign law is treated
as a question of fact to be properly pleaded and
proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to
know only domestic or forum law.35
Unfortunately for petitioner, it did not prove the
pertinent Saudi laws on the matter; thus, the
International Law doctrine of presumed-identity
approach or processual presumption comes into
play.36 Where a foreign law is not pleaded or, even if
pleaded, is not proved, the presumption is that foreign
law is the same as ours.37 Thus, we apply Philippine
labor laws in determining the issues presented before
us.
Petitioner EDI claims that it had proven that Gran was
legally dismissed due to incompetence and
insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by
Philippine law and jurisprudence that the employer
should prove that the dismissal of employees or
personnel is legal and just.
Section 33 of Article 277 of the Labor Code38 states
that:
ART. 277. MISCELLANEOUS PROVISIONS39
(b) Subject to the constitutional right of
workers to security of tenure and their right
to be protected against dismissal except for a
just and authorized cause and without
prejudice to the requirement of notice under
Article 283 of this Code, the employer shall
furnish the worker whose employment is
sought to be terminated a written notice
containing a statement of the causes for
termination and shall afford the latter ample
opportunity to be heard and to defend himself
with the assistance of his representative if he
so desires in accordance with company rules
and regulations promulgated pursuant to
guidelines set by the Department of Labor and
Employment. Any decision taken by the
employer shall be without prejudice to the
right of the workers to contest the validity or
legality of his dismissal by filing a complaint
with the regional branch of the National Labor
Relations Commission. The burden of
proving that the termination was for a
52
 valid or authorized cause shall rest on the
employer. x x x
In many cases, it has been held that in termination
disputes or illegal dismissal cases, the employer has
the burden of proving that the dismissal is for just and
valid causes; and failure to do so would necessarily
mean that the dismissal was not justified and
therefore illegal.40 Taking into account the character of
the charges and the penalty meted to an employee, the
employer is bound to adduce clear, accurate,
consistent, and convincing evidence to prove that the
dismissal is valid and legal.41 This is consistent with
the principle of security of tenure as guaranteed by the
Constitution and reinforced by Article 277 (b) of the
Labor Code of the Philippines.42
In the instant case, petitioner claims that private
respondent Gran was validly dismissed for just cause,
due to incompetence and insubordination or
disobedience. To prove its allegations, EDI submitted
two letters as evidence. The first is the July 9, 1994
termination letter,43 addressed to Gran, from Andrea
E. Nicolaou, Managing Director of OAB. The second is
an unsigned April 11, 1995 letter44 from OAB
addressed to EDI and ESI, which outlined the reasons
why OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the
Computer Specialist position because he had
"insufficient knowledge in programming and zero
knowledge of [the] ACAD system."45 Petitioner also
claims that Gran was justifiably dismissed due to
insubordination or disobedience because he
continually failed to submit the required "Daily
Activity Reports."46However, other than the
abovementioned letters, no other evidence was
presented to show how and why Gran was considered
incompetent, insubordinate, or disobedient. Petitioner
EDI had clearly failed to overcome the burden of
proving that Gran was validly dismissed.
Petitioner's imputation of incompetence on private
respondent due to his "insufficient knowledge in
programming and zero knowledge of the ACAD
system" based only on the above mentioned letters,
without any other evidence, cannot be given credence.
An allegation of incompetence should have a factual
foundation. Incompetence may be shown by weighing
it against a standard, benchmark, or criterion.
However, EDI failed to establish any such bases to
show how petitioner found Gran incompetent.
In addition, the elements that must concur for the
charge of insubordination or willful disobedience to
prosper were not present.
In Micro Sales Operation Network v. NLRC, we held
that:
For willful disobedience to be a valid cause for
dismissal, the following twin elements must
concur: (1) the employee's assailed conduct
must have been willful, that is, characterized
by a wrongful and perverse attitude; and (2)
the order violated must have been reasonable,
lawful, made known to the employee and
must pertain to the duties which he had been
engaged to discharge.47
EDI failed to discharge the burden of proving Gran's
insubordination or willful disobedience. As indicated
by the second requirement provided for in Micro Sales
Operation Network, in order to justify willful
disobedience, we must determine whether the order
violated by the employee is reasonable, lawful, made
known to the employee, and pertains to the duties
which he had been engaged to discharge. In the case at
bar, petitioner failed to show that the order of the
company which was violated—the submission of
"Daily Activity Reports"—was part of Gran's duties as
a Computer Specialist. Before the Labor Arbiter, EDI
should have provided a copy of the company policy,
Gran's job description, or any other document that
would show that the "Daily Activity Reports" were
required for submission by the employees, more
particularly by a Computer Specialist.
Even though EDI and/or ESI were merely the local
employment or recruitment agencies and not the
foreign employer, they should have adduced
additional evidence to convincingly show that Gran's
employment was validly and legally terminated. The
burden devolves not only upon the foreign-based
employer but also on the employment or recruitment
agency for the latter is not only an agent of the former,
but is also solidarily liable with the foreign principal
for any claims or liabilities arising from the dismissal
of the worker.48
Thus, petitioner failed to prove that Gran was
justifiably dismissed due to incompetence,
insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v. NLRC,49 as
used by the CA in its Decision, is not applicable to the
present case.
In Prieto, this Court ruled that "[i]t is presumed that
before their deployment, the petitioners were
subjected to trade tests required by law to be
conducted by the recruiting agency to insure
employment of only technically qualified workers for
the foreign principal."50 The CA, using the ruling in the
said case, ruled that Gran must have passed the test;
otherwise, he would not have been hired. Therefore,
EDI was at fault when it deployed Gran who was
allegedly "incompetent" for the job.
According to petitioner, the Prieto ruling is not
applicable because in the case at hand, Gran
misrepresented himself in his curriculum vitae as a
Computer Specialist; thus, he was not qualified for the
job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The purpose of
the required trade test is to weed out incompetent
applicants from the pool of available workers. It is
supposed to reveal applicants with false educational
backgrounds, and expose bogus qualifications. Since
EDI deployed Gran to Riyadh, it can be presumed that
Gran had passed the required trade test and that Gran
is qualified for the job. Even if there was no objective
trade test done by EDI, it was still EDI's responsibility
53
to subject Gran to a trade test; and its failure to do so
only weakened its position but should not in any way
prejudice Gran. In any case, the issue is rendered moot
and academic because Gran's incompetency is
unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi
laws, Philippine Labor laws and regulations shall
govern the relationship between Gran and EDI. Thus,
our laws and rules on the requisites of due process
relating to termination of employment shall apply.
Petitioner EDI claims that private respondent Gran
was afforded due process, since he was allowed to
work and improve his capabilities for five months
prior to his termination.51 EDI also claims that the
requirements of due process, as enunciated in Santos,
Jr. v. NLRC,52 and Malaya Shipping Services, Inc. v.
NLRC,53 cited by the CA in its Decision, were properly
observed in the present case.
This position is untenable.
In Agabon v. NLRC,54 this Court held that:
Procedurally, (1) if the dismissal is based on a
just cause under Article 282, the employer
must give the employee two written notices
and a hearing or opportunity to be heard if
requested by the employee before
terminating the employment: a notice
specifying the grounds for which dismissal is
sought a hearing or an opportunity to be
heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized
causes under Articles 283 and 284, the
employer must give the employee and the
Department of Labor and Employment
written notices 30 days prior to the effectivity
of his separation.
Under the twin notice requirement, the employees
must be given two (2) notices before their
employment could be terminated: (1) a first notice to
apprise the employees of their fault, and (2) a second
notice to communicate to the employees that their
employment is being terminated. In between the first
and second notice, the employees should be given a
hearing or opportunity to defend themselves
personally or by counsel of their choice.55
A careful examination of the records revealed that,
indeed, OAB's manner of dismissing Gran fell short of
the two notice requirement. While it furnished Gran
the written notice informing him of his dismissal, it
failed to furnish Gran the written notice apprising him
of the charges against him, as prescribed by the Labor
Code.56 Consequently, he was denied the opportunity
to respond to said notice. In addition, OAB did not
schedule a hearing or conference with Gran to defend
himself and adduce evidence in support of his
defenses. Moreover, the July 9, 1994 termination letter
was effective on the same day. This shows that OAB
had already condemned Gran to dismissal, even before
Gran was furnished the termination letter. It should
also be pointed out that OAB failed to give Gran the
chance to be heard and to defend himself with the
assistance of a representative in accordance with
Article 277 of the Labor Code. Clearly, there was no
intention to provide Gran with due process. Summing
up, Gran was notified and his employment arbitrarily
terminated on the same day, through the same letter,
and for unjustified grounds. Obviously, Gran was not
afforded due process.
Pursuant to the doctrine laid down in Agabon,57 an
employer is liable to pay nominal damages as
indemnity for violating the employee's right to
statutory due process. Since OAB was in breach of the
due process requirements under the Labor Code and
its regulations, OAB, ESI, and EDI, jointly and
solidarily, are liable to Gran in the amount of PhP
30,000.00 as indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees
hired for a fixed period of employment, in cases
arising before the effectivity of R.A. No.
804258 (Migrant Workers and Overseas Filipinos Act)
on August 25, 1995, that when the contract is for a
fixed term and the employees are dismissed without
just cause, they are entitled to the payment of their
salaries corresponding to the unexpired portion of
their contract.59 On the other hand, for cases arising
after the effectivity of R.A. No. 8042, when the
termination of employment is without just, valid or
authorized cause as defined by law or contract, the
worker shall be entitled to the full reimbursement of
his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3)
months for every year of the unexpired term
whichever is less.60
In the present case, the employment contract provides
that the employment contract shall be valid for a
period of two (2) years from the date the employee
starts to work with the employer.61 Gran arrived in
Riyadh, Saudi Arabia and started to work on February
7, 1994;62 hence, his employment contract is until
February 7, 1996. Since he was illegally dismissed on
July 9, 1994, before the effectivity of R.A. No. 8042, he
is therefore entitled to backwages corresponding to
the unexpired portion of his contract, which was
equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of
backwages and mainly relies on the Declaration which
is claimed to have been freely and voluntarily
executed by Gran. The relevant portions of the
Declaration are as follows:
I, ELEAZAR GRAN (COMPUTER SPECIALIST)
AFTER RECEIVING MY FINAL SETTLEMENT
ON THIS DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO
THOUSAND NINE
HUNDRED FORTY EIGHT ONLY)
54
 REPRESENTING COMPLETE PAYMENT
(COMPENSATION) FOR THE SERVICES I
RENDERED TO OAB ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO
FINANCIAL OBLIGATION IN MY FAVOUR
AFTER RECEIVING THE ABOVE MENTIONED
AMOUNT IN CASH.
I STATE FURTHER THAT OAB EST. HAS NO
OBLIGATION TOWARDS ME IN WHATEVER
FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS
STATEMENT BY AFFIXING MY SIGNATURE
VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous
review of quitclaims or waivers, more particularly
those executed by employees. This requirement was
clearly articulated by Chief Justice Artemio V.
Panganiban in Land and Housing Development
Corporation v. Esquillo:
Quitclaims, releases and other waivers of
benefits granted by laws or contracts in favor
of workers should be strictly scrutinized to
protect the weak and the disadvantaged. The
waivers should be carefully examined, in
regard not only to the words and terms
used, but also the factual circumstances
under which they have been
executed.63 (Emphasis supplied.)
This Court had also outlined in Land and Housing
Development Corporation, citing Periquet v. NLRC,64 the
parameters for valid compromise agreements,
waivers, and quitclaims:
Not all waivers and quitclaims are invalid as
against public policy. If the agreement was
voluntarily entered into and represents a
reasonable settlement, it is binding on the
parties and may not later be disowned simply
because of a change of mind. It is only where
there is clear proof that the waiver was
wangled from an unsuspecting or gullible
person, or the terms of settlement are
unconscionable on its face, that the law will
step in to annul the questionable transaction.
But where it is shown that the person
making the waiver did so voluntarily, with
full understanding of what he was doing,
and the consideration for the quitclaim is
credible and reasonable, the transaction
must be recognized as a valid and binding
undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration
valid? It is not.
The Court finds the waiver and quitclaim null and void
for the following reasons:
1. The salary paid to Gran upon his termination, in the
amount of SR 2,948.00, is unreasonably low. As
correctly pointed out by the court a quo, the payment
of SR 2,948.00 is even lower than his monthly salary of
SR 3,190.00 (USD 850.00). In addition, it is also very
much less than the USD 16,150.00 which is the amount
Gran is legally entitled to get from petitioner EDI as
backwages.
2. The Declaration reveals that the payment of SR
2,948.00 is actually the payment for Gran's salary for
the services he rendered to OAB as Computer
Specialist. If the Declaration is a quitclaim, then the
consideration should be much much more than the
monthly salary of SR 3,190.00 (USD 850.00)—
although possibly less than the estimated Gran's
salaries for the remaining duration of his contract and
other benefits as employee of OAB. A quitclaim will
understandably be lower than the sum total of the
amounts and benefits that can possibly be awarded to
employees or to be earned for the remainder of the
contract period since it is a compromise where the
employees will have to forfeit a certain portion of the
amounts they are claiming in exchange for the early
payment of a compromise amount. The court may
however step in when such amount is unconscionably
low or unreasonable although the employee
voluntarily agreed to it. In the case of the Declaration,
the amount is unreasonably small compared to the
future wages of Gran.
3. The factual circumstances surrounding the
execution of the Declaration would show that Gran did
not voluntarily and freely execute the document.
Consider the following chronology of events:
a. On July 9, 1994, Gran received a copy of his
letter of termination;
b. On July 10, 1994, Gran was instructed to
depart Saudi Arabia and required to pay his
plane ticket;65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from
Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint
before the NLRC.
The foregoing events readily reveal that Gran was
"forced" to sign the Declaration and constrained to
receive the amount of SR 2,948.00 even if it was
against his will—since he was told on July 10, 1994 to
leave Riyadh on July 12, 1994. He had no other choice
but to sign the Declaration as he needed the amount of
SR 2,948.00 for the payment of his ticket. He could
have entertained some apprehensions as to the status
of his stay or safety in Saudi Arabia if he would not
sign the quitclaim.
4. The court a quo is correct in its finding that the
Declaration is a contract of adhesion which should be
construed against the employer, OAB. An adhesion
contract is contrary to public policy as it leaves the
weaker party—the employee—in a "take-it-or-leave-
it" situation. Certainly, the employer is being unjust to
55
the employee as there is no meaningful choice on the
part of the employee while the terms are unreasonably
favorable to the employer.66
Thus, the Declaration purporting to be a quitclaim and
waiver is unenforceable under Philippine laws in the
absence of proof of the applicable law of Saudi Arabia.
In order to prevent disputes on the validity and
enforceability of quitclaims and waivers of employees
under Philippine laws, said agreements should contain
the following:
WHEREFORE, the petition is DENIED. The October 18,
2000 Decision in CA-G.R. SP No. 56120 of the Court of
Appeals affirming the January 15, 1999 Decision and
September 30, 1999 Resolution of the NLRC
is AFFIRMED with the MODIFICATION that petitioner
EDI-Staffbuilders International, Inc. shall pay the
amount of PhP 30,000.00 to respondent Gran as
nominal damages for non-compliance with statutory
due process.
No costs.

1. A fixed amount as full and final compromise SO ORDERED.

settlement;
Quisumbing, Carpio, Tinga, Nachura, JJ., concur.
2. The benefits of the employees if possible with the
corresponding amounts, which the employees are
giving up in consideration of the fixed compromise
amount;
Footnotes
3. A statement that the employer has clearly explained
to the employee in English, Filipino, or in the dialect * As per October 17, 2007 raffle.
known to the employees—that by signing the waiver
or quitclaim, they are forfeiting or relinquishing their
right to receive the benefits which are due them under
1 Rollo, pp. 9-39.
the law; and
2 Id. at 140-148. The Decision was penned by
4. A statement that the employees signed and executed Associate Justice Conchita Carpio Morales
the document voluntarily, and had fully understood (now a Member of this Court) and concurred
the contents of the document and that their consent in by Associate Justices Candido V. Rivera and
was freely given without any threat, violence, duress, Elvi John S. Asuncion.
intimidation, or undue influence exerted on their
person.
3 Id. at 86-99. The Decision was penned by
NLRC Commissioner Ireneo B. Bernardo and
It is advisable that the stipulations be made in concurred in by Commissioners Lourdes C.
English and Tagalog or in the dialect known to the Javier and Tito F. Genilo.
employee. There should be two (2) witnesses to the
execution of the quitclaim who must also sign the
4 Id. at 106-107.
quitclaim. The document should be subscribed and
sworn to under oath preferably before any 5 Id. at 140.
administering official of the Department of Labor and
Employment or its regional office, the Bureau of Labor 6 Id. at 140-141.
Relations, the NLRC or a labor attaché in a foreign
country. Such official shall assist the parties regarding 7 Id. at 40.
the execution of the quitclaim and waiver.67 This
compromise settlement becomes final and binding 8 Id. at 41.
under Article 227 of the Labor Code which provides
that:
9Signed by Eleazar S. Gran (second party) and
Mrs. Andrea Nicolaus (first party)
[A]ny compromise settlement voluntarily
representing Omar Ahmed Ali Bin Bechr Est.,
agreed upon with the assistance of the Bureau
dated January 20, 1994; id. at 42-50.
of Labor Relations or the regional office of the
DOLE, shall be final and binding upon the
parties and the NLRC or any court "shall not
10 Id. at 141.
assume jurisdiction over issues involved
therein except in case of non-compliance 11 Id. at 51.
thereof or if there is prima facieevidence that
the settlement was obtained through fraud, 12 Supra note 7.
misrepresentation, or coercion.
13 Rollo, p. 73.
It is made clear that the foregoing rules on quitclaim
or waiver shall apply only to labor contracts of OFWs 14 Id. at 75.
in the absence of proof of the laws of the foreign
country agreed upon to govern said contracts. 15 CA rollo, pp. 108-113.
Otherwise, the foreign laws shall apply.
16 Supra note 3, at 98.

56
17 Rollo, p. 80. al., G.R. No. 140047, July 14, 2004, 434 SCRA
202, 215.
18 Id. at 100 & 224.
38See Presidential Decree No. 442, "A Decree
19 Id. at 100-105. Instituting a Labor Code, Thereby Revising
and Consolidating Labor and Social Laws to
20 Id. at 219. Afford Protection to Labor, Promote
Employment and Human Resources
Development and Ensure Industrial Peace
21 Supra note 4, at 106. Based on Social Justice."
22Supra note 2, at 145; citing Carnation Phil. 39As amended by Sec. 33, R.A. 6715, "An Act
Employees Labor Union-FFW v. NLRC, G.R. No. to Extend Protection to Labor, Strengthen the
L-64397, October 11, 1983, 125 SCRA 42 and Constitutional Rights of Workers to Self-
Flexo Manufacturing Corporation v. NLRC, Organization, Collective Bargaining and
G.R. No. 164857, April 18, 1997, 135 SCRA Peaceful Concerted Activities, Foster
145. Industrial Peace and Harmony, Promote the
Preferential Use of Voluntary Modes of
23 Rollo, p. 220. Settling Labor Disputes, and Reorganize the
National Labor Relations Commission,
24G.R. No. L-57735, March 19, 1982, 112 SCRA Amending for these Purposes Certain
688, 691. Provisions of Presidential Decree No. 442, as
amended, Otherwise Known as The Labor
25G.R. No. L-60950, November 19, 1982, 118 Code of the Philippines, Appropriating Funds
SCRA 645, 646. Therefore and for Other Purposes," approved
on March 2, 1989.
26 Id.
40Ting v. Court of Appeals, G.R. No. 146174,
27 Supra note 22. July 12, 2006, 494 SCRA 610.

28G.R. No. L-63701, January 31, 1980, 127

41Bank of the Philippine Islands v. Uy, G.R. No.
SCRA 463. 156994, August 31, 2005, 468 SCRA 633.

29G.R. No. 146703, November 18, 2004, 443

42I Alcantara, Philippine Labor and Social
SCRA 35. Legislation 1052 (1999).

30 Rollo, pp. 84-85.

43 Supra note 11.

31 Id. The handwriting is illegible.

44 Rollo, pp. 155-156.

32Now Sec. 7 of New NLRC Rules of

45 Supra note 1, at 25.
Procedure.
46 Id. at 29.
33 Marlene Crisostomo v. Florito M. Garcia,
Jr., G.R. No. 164787, January 31, 2006, 481 47G.R. No. 155279, October 11, 2005, 472
SCRA 402; Bunao v. Social Security Sytem, G.R. SCRA 328, 335-336.
No. 156652, December 13, 2005, 477 SCRA
564, citing Vallejo v. Court of Appeals,G.R. No. 48Royal Crown Internationale v. NLRC, G.R. No.
156413, April 14, 2004, 427 SCRA 658, 669; 78085, October 16, 1989, 178 SCRA 569; see
and San Luis v. Court of Appeals, G.R. No. also G & M (Phil.), Inc. v. Willie
142649, September 13, 2001, 417 Phil. 598, Batomalaque, G.R. No. 151849, June 23, 2005,
605; Cadalin v. POEA Administrator, G.R. Nos. 461 SCRA 111.
104776, 104911, 105029-32, December 5,
1994, 238 SCRA 721; Pagdonsalan v. National 49G.R. No. 93699, September 10, 1993, 266
Labor Relations Commission, G.R. No. L-63701, SCRA 232.
January 31, 1984, 127 SCRA 463.
50 Id. at 237.
34 Civil Code, Art. 1306.
51 Rollo, p. 235.
35 Id. Loquia and Pangalanan, p. 144.
52G.R. No. 115795, March 6, 1998, 287 SCRA
36J.R. Coquia & E.A. Pangalangan, Conflict of 117.
Laws 157 (1995); citing Cramton, Currie, Kay,
Conflict of Laws Cases and Commentaries 56. 53G.R. No. 121698, March 26, 1998, 228 SCRA
181.
37Philippine Export and Loan Guarantee
Corporation v. V.P. Eusebio Construction Inc., et

57
54G.R. No. 158693, November 17, 2004, 442 hereby release and discharge (ay
SCRA 573, 608. aking pinawawalang-saysay at
tinatalikuran) aforesaid
King of Kings Transport Inc. v. Mamac, G.R.
55 company/corporation and its officers,
No. 166208, June 29, 2007. person/s (ang nabanggit na
kompanya/korporasyon at ang mga
56 See Article 277 (b) of the Labor Code; Sec. 2 tauhan nito) from any money claims
(I) (a) Rule XXIII Rules Implementing Book V (mula sa anumang paghahabol na
of the Labor Code; and Sec. 2 (d) (i) Rule I, nauukol sa pananalapi) by way of
Rules Implementing Book VI of the Labor unpaid wages (sa pamamagitan ng di
Code. nabayarang sahod), separation pay,
overtime pay otherwise (o
anupaman), as may be due to me (na
57 Supra note 54. karapat-dapat para sa akin) in
officers/person/s (na may kaugnayan
58 Took effect on July 15, 1995, R.A. No. 8042 sa aking huling pinapasukang
is "An Act to Institute the Policies of Overseas kompanya o korporasyon at sa mga
Employment and Establish a Higher Standard opisyales o tauhan nito).
of Protection and Promotion of the Welfare of
Migrant Workers their Families and Overseas I am executing this quitclaim and
Filipinos in Distress, and for Other Purposes." release (Isinasagawa ko ang
pagtalikod o pagpapawalang-saysay
59Land and Housing Development Corporation na ito), freely and voluntary (ng may
v. Esquillo, G.R. No. 152012, September 30, kalayaan at kusang-loob) before this
2005, 471 SCRA 488, 490. Honorable Office (sa harapan ng
marangal na tanggapang ito) without
60 Supra note 58, Sec. 10. any force or duress (ng walang
pamimilit o pamumuwersa) and as
61 Rollo, p. 45. part of the compromise agreement
reached during the preventive
62Id. at 70, OAB's Final Account of Gran's conciliation and mediation process
salaries receivable. conducted in the NLRC (at bilang
bahagi ng napagkasunduan buhat sa
proseso ng "preventive conciliation at
63 Supra note 59.
mediation" dito sa NLRC).
64G.R. No. 91298, June 22 1990, 186 SCRA
IN VIEW WHEREOF (DAHIL DITO), I
724, 730.
hereunto set my hand this (ako'y
lumagda ngayong) ______ day of (araw
65 Supra note 14, at 76. ng) _________________, 200__, in Quezon
City (sa Lungsod ng Quezon).
66 Chretian v. Donald L. Bren Co. (1984) 151
[185 Cal. App. 3d 450]. _____________________
Signature of the Requesting Party
67 A form copy of the Quitclaim and Release
(Lagda ng Partidong Humiling ng Com-Med Conference)
used by the NLRC is reproduced below for the
guidance of management and labor:
Signed in presence of (Nilagdaan sa
harapan ni):
Republic of the Philippines
Department of Labor and
____________________________________
Employment
NATIONAL LABOR RELATIONS
COMMISSION Name in Print below Signature
Quezon City (Limbagin ang pangalan sa ilalim ng
lagda)
CONCILIATION AND MEDIATION
QUITCLAIM AND RELEASE ___________________________________________
PAGTALIKOD AT PAGPAPAWALANG- ___________________________________________
SAYSAY
SUBSCRIBED AND SWORN TO before
I (Ako), _______________________________ of me this ____ day of ____________ 200__ in
legal age (may sapat na gulang) Quezon City, Philippines.
residing at (nakatira sa)
____________________________ for and in
_____________________
consideration of the amountLabor of Arbiter
(bilang konsiderasyon sa halagang)
_________________ pesos (piso) given to The Lawphil Project - Arellano Law Foundation
me by (na ibinigay sa akin ng)
_________________________________, do

58
Processual Presumption
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 193707 December 10, 2014
NORMA A. DEL SOCORRO, for and in behalf of her
minor child RODERIGO NORJO VAN
WILSEM, Petitioner,
vs.
ERNST JOHAN BRINKMAN VAN
WILSEM, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari
under Rule 45 of the Rules of Court seeking to reverse
and set aside the Orders1 dated February 19, 2010 and
September 1, 2010, respectively, of the Regional Trial
Court of Cebu City (RTC-Cebu), which dismissed the
criminal case entitled People of the Philippines v.
Ernst Johan Brinkman Van Wilsem, docketed as
Criminal Case No. CBU-85503, for violation of Republic
Act (R.A.) No. 9262, otherwise known as the Anti-
Violence Against Women and Their Children Act of
2004.
The following facts are culled from the records:
Petitioner Norma A. Del Socorro and respondent Ernst
Johan Brinkman Van Wilsem contracted marriage in
Holland on September 25, 1990.2 On January 19, 1994,
they were blessed with a son named Roderigo Norjo
Van Wilsem, who at the time of the filing of the instant
petition was sixteen (16) years of age.3
Unfortunately, their marriage bond ended on July 19,
1995 by virtue of a Divorce Decree issued by the
appropriate Court of Holland.4 At that time, their son
was only eighteen (18) months old.5 Thereafter,
petitioner and her son came home to the Philippines.6
According to petitioner, respondent made a promise to
provide monthly support to their son in the amount of
Two Hundred Fifty (250) Guildene (which is
equivalent to Php17,500.00 more or less).7 However,
since the arrival of petitioner and her son in the
Philippines, respondent never gave support to the son,
Roderigo.8
Not long thereafter, respondent cameto the
Philippines and remarried in Pinamungahan, Cebu,
and since then, have been residing
thereat.9 Respondent and his new wife established a
business known as Paree Catering, located at Barangay
Tajao, Municipality of Pinamungahan, Cebu City.10 To
date, all the parties, including their son, Roderigo, are
presently living in Cebu City.11
On August 28, 2009, petitioner, through her counsel,
sent a letter demanding for support from respondent.
However, respondent refused to receive the letter.12
Because of the foregoing circumstances, petitioner
filed a complaint affidavit with the Provincial
Prosecutor of Cebu City against respondent for
violation of Section 5, paragraph E(2) of R.A. No. 9262
for the latter’s unjust refusal to support his minor
child with petitioner.13 Respondent submitted his
counter-affidavit thereto, to which petitioner also
submitted her reply-affidavit.14 Thereafter, the
Provincial Prosecutor of Cebu City issued a Resolution
recommending the filing of an information for the
crime charged against herein respondent.
The information, which was filed with the RTC-Cebu
and raffled to Branch 20 thereof, states that:
That sometime in the year 1995 and up to the present,
more or less, in the Municipality of Minglanilla,
Province of Cebu, Philippines, and within the
jurisdiction of this Honorable Court, the above-named
accused, did then and there wilfully, unlawfully and
deliberately deprive, refuse and still continue to
deprive his son RODERIGO NORJO VAN WILSEM, a
fourteen (14) year old minor, of financial support
legally due him, resulting in economic abuse to the
victim. CONTRARY TO LAW.15
Upon motion and after notice and hearing, the RTC-
Cebu issued a Hold Departure Order against
respondent.16Consequently, respondent was arrested
and, subsequently, posted bail.17 Petitioner also filed a
Motion/Application of Permanent Protection Order to
which respondent filed his Opposition.18 Pending the
resolution thereof, respondent was
arraigned.19 Subsequently, without the RTC-Cebu
having resolved the application of the protection
order, respondent filed a Motion to Dismiss on the
ground of: (1) lack of jurisdiction over the offense
charged; and (2) prescription of the crime charged.20
On February 19, 2010, the RTC-Cebu issued the herein
assailed Order,21 dismissing the instant criminal case
against respondent on the ground that the facts
charged in the information do not constitute an
offense with respect to the respondent who is an alien,
the dispositive part of which states:
WHEREFORE, the Court finds that the facts charged in
the information do not constitute an offense with
respect to the accused, he being an alien, and
accordingly, orders this case DISMISSED.
The bail bond posted by accused Ernst Johan
Brinkman Van Wilsem for his provisional liberty is
hereby cancelled (sic) and ordered released.
SO ORDERED.
Cebu City, Philippines, February 19, 2010.22
Thereafter, petitioner filed her Motion for
Reconsideration thereto reiterating respondent’s
obligation to support their child under Article 195 23 of
the Family Code, thus, failure to do so makes him liable
under R.A. No. 9262 which "equally applies to all
59
persons in the Philippines who are obliged to support
their minor children regardless of the obligor’s
nationality."24
On September 1, 2010, the lower court issued an
Order25 denying petitioner’s Motion for
Reconsideration and reiterating its previous ruling.
Thus:
x x x The arguments therein presented are basically a
rehash of those advanced earlier in the memorandum
of the prosecution. Thus, the court hereby reiterates
its ruling that since the accused is a foreign national he
is not subject to our national law (The Family Code) in
regard to a parent’s duty and obligation to givesupport
to his child. Consequently, he cannot be charged of
violating R.A. 9262 for his alleged failure to support
his child. Unless it is conclusively established that R.A.
9262 applies to a foreigner who fails to give support
tohis child, notwithstanding that he is not bound by
our domestic law which mandates a parent to give
such support, it is the considered opinion of the court
that no prima faciecase exists against the accused
herein, hence, the case should be dismissed.
WHEREFORE, the motion for reconsideration is
hereby DENIED for lack of merit.
SO ORDERED.
Cebu City, Philippines, September 1, 2010.26
Hence, the present Petition for Review on Certiorari
raising the following issues:
1. Whether or not a foreign national has an
obligation to support his minor child under
Philippine law; and
2. Whether or not a foreign national can be
held criminally liable under R.A. No. 9262 for
his unjustified failure to support his minor
child.27
At the outset, let it be emphasized that We are taking
cognizance of the instant petition despite the fact that
the same was directly lodged with the Supreme Court,
consistent with the ruling in Republic v. Sunvar Realty
Development Corporation,28 which lays down the
instances when a ruling of the trial court may be
brought on appeal directly to the Supreme Court
without violating the doctrine of hierarchy of courts,
to wit:
x x x Nevertheless, the Rules do not prohibit any of the
parties from filing a Rule 45 Petition with this Court, in
case only questions of law are raised or involved. This
latter situation was one that petitioners found
themselves in when they filed the instant Petition to
raise only questions of law. In Republic v. Malabanan,
the Court clarified the three modes of appeal from
decisions of the RTC, to wit: (1) by ordinary appeal or
appeal by writ of error under Rule 41, whereby
judgment was rendered in a civil or criminal action by
the RTC in the exercise of its original jurisdiction; (2)
by a petition for review under Rule 42, whereby
judgment was rendered by the RTC in the exercise of
its appellate jurisdiction; and (3) by a petition for
review on certiorari before the Supreme Court under
Rule 45. "The first mode of appeal is taken to the
[Court of Appeals] on questions of fact or mixed
questions of fact and law. The second mode of appeal
is brought to the CA on questions of fact, of law, or
mixed questions of fact and law. The third mode of
appealis elevated to the Supreme Court only on
questions of law." (Emphasis supplied)
There is a question of law when the issue does not call
for an examination of the probative value of the
evidence presented or of the truth or falsehood of the
facts being admitted, and the doubt concerns the
correct application of law and jurisprudence on the
matter. The resolution of the issue must rest solely on
what the law provides on the given set of
circumstances.29
Indeed, the issues submitted to us for resolution
involve questions of law – the response thereto
concerns the correct application of law and
jurisprudence on a given set of facts, i.e.,whether or
not a foreign national has an obligation to support his
minor child under Philippine law; and whether or not
he can be held criminally liable under R.A. No. 9262
for his unjustified failure to do so.
It cannot be negated, moreover, that the instant
petition highlights a novel question of law concerning
the liability of a foreign national who allegedly
commits acts and omissions punishable under special
criminal laws, specifically in relation to family rights
and duties. The inimitability of the factual milieu of the
present case, therefore, deserves a definitive ruling by
this Court, which will eventually serve as a guidepost
for future cases. Furthermore, dismissing the instant
petition and remanding the same to the CA would only
waste the time, effort and resources of the courts.
Thus, in the present case, considerations of efficiency
and economy in the administration of justice should
prevail over the observance of the hierarchy of courts.
Now, on the matter of the substantive issues, We find
the petition meritorious. Nonetheless, we do not fully
agree with petitioner’s contentions.
To determine whether or not a person is criminally
liable under R.A. No. 9262, it is imperative that the
legal obligation to support exists.
Petitioner invokes Article 19530 of the Family Code,
which provides the parent’s obligation to support his
child. Petitioner contends that notwithstanding the
existence of a divorce decree issued in relation to
Article 26 of the Family Code,31 respondent is not
excused from complying with his obligation to support
his minor child with petitioner.
On the other hand, respondent contends that there is
no sufficient and clear basis presented by petitioner
that she, as well as her minor son, are entitled to
financial support.32 Respondent also added that by
reason of the Divorce Decree, he is not obligated
topetitioner for any financial support.33
On this point, we agree with respondent that
petitioner cannot rely on Article 19534 of the New Civil
Code in demanding support from respondent, who is a
foreign citizen, since Article 1535 of the New Civil Code
60
stresses the principle of nationality. In other words,
insofar as Philippine laws are concerned, specifically
the provisions of the Family Code on support, the
same only applies to Filipino citizens. By analogy, the
same principle applies to foreigners such that they are
governed by their national law with respect to family
rights and duties.36
The obligation to give support to a child is a matter
that falls under family rights and duties. Since the
respondent is a citizen of Holland or the Netherlands,
we agree with the RTC-Cebu that he is subject to the
laws of his country, not to Philippinelaw, as to whether
he is obliged to give support to his child, as well as the
consequences of his failure to do so.37
In the case of Vivo v. Cloribel,38 the Court held that –
Furthermore, being still aliens, they are not in position
to invoke the provisions of the Civil Code of the
Philippines, for that Code cleaves to the principle that
family rights and duties are governed by their
personal law, i.e.,the laws of the nation to which they
belong even when staying in a foreign country (cf. Civil
Code, Article 15).39
It cannot be gainsaid, therefore, that the respondent is
not obliged to support petitioner’s son under
Article195 of the Family Code as a consequence of the
Divorce Covenant obtained in Holland. This does not,
however, mean that respondent is not obliged to
support petitioner’s son altogether.
In international law, the party who wants to have a
foreign law applied to a dispute or case has the burden
of proving the foreign law.40 In the present case,
respondent hastily concludes that being a national of
the Netherlands, he is governed by such laws on the
matter of provision of and capacity to support.41 While
respondent pleaded the laws of the Netherlands in
advancing his position that he is not obliged to
support his son, he never proved the same.
It is incumbent upon respondent to plead and prove
that the national law of the Netherlands does not
impose upon the parents the obligation to support
their child (either before, during or after the issuance
of a divorce decree), because Llorente v. Court of
Appeals,42 has already enunciated that:
True, foreign laws do not prove themselves in our
jurisdiction and our courts are not authorized to
takejudicial notice of them. Like any other fact, they
must be alleged and proved.43
In view of respondent’s failure to prove the national
law of the Netherlands in his favor, the doctrine of
processual presumption shall govern. Under this
doctrine, if the foreign law involved is not properly
pleaded and proved, our courts will presume that the
foreign law is the same as our local or domestic or
internal law.44 Thus, since the law of the Netherlands
as regards the obligation to support has not been
properly pleaded and proved in the instant case, it is
presumed to be the same with Philippine law, which
enforces the obligation of parents to support their
children and penalizing the non-compliance therewith.
Moreover, while in Pilapil v. Ibay-Somera,45 the Court
held that a divorce obtained in a foreign land as well as
its legal effects may be recognized in the Philippines in
view of the nationality principle on the matter of
status of persons, the Divorce Covenant presented by
respondent does not completely show that he is
notliable to give support to his son after the divorce
decree was issued. Emphasis is placed on petitioner’s
allegation that under the second page of the aforesaid
covenant, respondent’s obligation to support his child
is specifically stated,46 which was not disputed by
respondent.
We likewise agree with petitioner that
notwithstanding that the national law of respondent
states that parents have no obligation to support their
children or that such obligation is not punishable by
law, said law would still not find applicability,in light
of the ruling in Bank of America, NT and SA v.
American Realty Corporation,47 to wit:
In the instant case, assuming arguendo that the
English Law on the matter were properly pleaded and
proved in accordance with Section 24, Rule 132 of the
Rules of Court and the jurisprudence laid down in Yao
Kee, et al. vs. Sy-Gonzales, said foreign law would still
not find applicability.
Thus, when the foreign law, judgment or contract is
contrary to a sound and established public policy of
the forum, the said foreign law, judgment or order
shall not be applied.
Additionally, prohibitive laws concerning persons,
their acts or property, and those which have for their
object public order, public policy and good customs
shall not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions
agreed upon in a foreign country.
The public policy sought to be protected in the instant
case is the principle imbedded in our jurisdiction
proscribing the splitting up of a single cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure
is pertinent
—
If two or more suits are instituted on the basis of the
same cause of action, the filing of one or a judgment
upon the merits in any one is available as a ground for
the dismissal of the others. Moreover, foreign law
should not be applied when its application would
work undeniable injustice to the citizens or residents
of the forum. To give justice is the most important
function of law; hence, a law, or judgment or contract
that is obviously unjust negates the fundamental
principles of Conflict of Laws.48
Applying the foregoing, even if the laws of the
Netherlands neither enforce a parent’s obligation to
support his child nor penalize the noncompliance
therewith, such obligation is still duly enforceable in
the Philippines because it would be of great injustice
to the child to be denied of financial support when the
latter is entitled thereto.
61
We emphasize, however, that as to petitioner herself,
respondent is no longer liable to support his former
wife, in consonance with the ruling in San Luis v. San
Luis,49 to wit:
As to the effect of the divorce on the Filipino wife, the
Court ruled that she should no longerbe considered
marriedto the alien spouse. Further, she should not be
required to perform her marital duties and
obligations. It held:
To maintain, as private respondent does, that, under
our laws, petitioner has to be considered still married
to private respondent and still subject to a wife's
obligations under Article 109, et. seq. of the Civil Code
cannot be just. Petitioner should not be obliged to live
together with, observe respect and fidelity, and render
support to private respondent. The latter should not
continue to be one of her heirs with possible rights to
conjugal property. She should not be discriminated
against in her own country if the ends of justice are to
be served. (Emphasis added)50
Based on the foregoing legal precepts, we find that
respondent may be made liable under Section 5(e) and
(i) of R.A. No. 9262 for unjustly refusing or failing to
give support topetitioner’s son, to wit:
SECTION 5. Acts of Violence Against Women and Their
Children.- The crime of violence against women and
their children is committed through any of the
following acts:
xxxx
(e) Attempting to compel or compelling the woman or
her child to engage in conduct which the woman or
her child has the right to desist from or desist from
conduct which the woman or her child has the right to
engage in, or attempting to restrict or restricting the
woman's or her child's freedom of movement or
conduct by force or threat of force, physical or other
harm or threat of physical or other harm, or
intimidation directed against the woman or child. This
shall include, butnot limited to, the following acts
committed with the purpose or effect of controlling or
restricting the woman's or her child's movement or
conduct:
xxxx
(2) Depriving or threatening to deprive the woman or
her children of financial support legally due her or her
family, or deliberately providing the woman's children
insufficient financial support; x x x x
(i) Causing mental or emotional anguish, public
ridicule or humiliation to the woman or her child,
including, but not limited to, repeated verbal and
emotional abuse, and denial of financial support or
custody of minor childrenof access to the woman's
child/children.51
Under the aforesaid special law, the deprivation or
denial of financial support to the child is considered
anact of violence against women and children.
In addition, considering that respondent is currently
living in the Philippines, we find strength in
petitioner’s claim that the Territoriality Principle in
criminal law, in relation to Article 14 of the New Civil
Code, applies to the instant case, which provides that:
"[p]enal laws and those of public security and safety
shall be obligatory upon all who live and sojourn in
Philippine territory, subject to the principle of public
international law and to treaty stipulations." On this
score, it is indisputable that the alleged continuing acts
of respondent in refusing to support his child with
petitioner is committed here in the Philippines as all of
the parties herein are residents of the Province of
Cebu City. As such, our courts have territorial
jurisdiction over the offense charged against
respondent. It is likewise irrefutable that jurisdiction
over the respondent was acquired upon his arrest.
Finally, we do not agree with respondent’s argument
that granting, but not admitting, that there is a legal
basis for charging violation of R.A. No. 9262 in the
instant case, the criminal liability has been
extinguished on the ground of prescription of
crime52 under Section 24 of R.A. No. 9262, which
provides that:
SECTION 24. Prescriptive Period. – Acts falling under
Sections 5(a) to 5(f) shall prescribe in twenty (20)
years. Acts falling under Sections 5(g) to 5(I) shall
prescribe in ten (10) years.
The act of denying support to a child under Section
5(e)(2) and (i) of R.A. No. 9262 is a continuing
offense,53 which started in 1995 but is still ongoing at
present. Accordingly, the crime charged in the instant
case has clearly not prescribed.
Given, however, that the issue on whether respondent
has provided support to petitioner’s child calls for an
examination of the probative value of the evidence
presented, and the truth and falsehood of facts being
admitted, we hereby remand the determination of this
issue to the RTC-Cebu which has jurisdiction over the
case.
WHEREFORE, the petition is GRANTED. The Orders
dated February 19, 2010 and September 1, 2010,
respectively, of the Regional Trial Court of the City of
Cebu are hereby REVERSED and SET ASIDE. The case
is REMANDED to the same court to conduct further
proceedings based on the merits of the case.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
MARTIN S. JOSE CATRAL
VILLARAMA, JR. MENDOZA*
Associate Justice Associate Justice
62
BIENVENIDO L. REYES 15 Id. at 22.
Associate Justice
16 Id.
ATTESTATION
17 Id. at 24.
I attest that the conclusions in the above Decision had
been reached in consultation before the case was 18 Id. at 8.
assigned to the writer of the opinion of the Court's
Division. 19 Id.

PRESBITERO J. VELASCO, JR. 20 Id.

Associate Justice
Chairperson, Third Division 21 Supra note 7.
CERTIFICATION 22 Id.at 24.
Pursuant to Section 13, Article VIII of the Constitution
and the Division Chairperson's Attestation, I certify
23Art. 195. Subject to the provisions of the
that the conclusions in the above Decision had been succeeding articles, the following are obliged
reached in consultation before the case was assigned to support each other to the whole extent set
to the writer of the opinion of the Court's Division. forth in the preceding article:

MARIA LOURDES P.A. SERENO (1) The spouses;

Chief Justice
(2) Legitimate ascendants and
descendants;

(3) Parents and their legitimate

Footnotes children and the legitimate and
illegitimate children of the latter;
* Designated Acting Member in lieu of
Associate Justice Francis H. Jardeleza, per (4) Parents and their illegitimate
Special Order No. 1896 dated November 28, children and the legitimate and
2014 illegitimate children of the latter; and

1Penned by Judge Bienvenido R. Saniel, Jr.; (5) Legitimate brothers and sisters,
Annexes "A" and "B" to Petition, respectively, whether of full or half-blood.
rollo, pp. 22-26.
24 Annex "R" to Petition, rollo, p. 102.
2 Rollo, p. 6.
25 Annex "B" to Petition, id. at 25.
3 Id.
26 Id.
4 Id. at 7.
27 Rollo, p. 10.
5 Annex "F" to Petition, rollo, p. 31.
28G.R. No. 194880, June 20, 2012, 674 SCRA
6 Id. at 32. 320.

7 Annex "A" to Petition, rollo, pp. 23-24.

29 Id.at 332-333.

8 Id. at 24.
30 Supra note 23.

9 Id.at 32.
31Art. 26. All marriages solemnized outside
the Philippines, in accordance with the laws in
force in the country where they were
10 Id. solemnized, and valid there assuch, shall also
be valid in this country, except those
11 Supra note 7, at 23-24. prohibited under Articles 35 (1), (4), (5) and
(6), 3637 and 38.
12 Supra note 5, at 32.
Where a marriage between a Filipino
13 Rollo, p. 7. citizen and a foreigner is validly
celebrated and a divorce is thereafter
14 Id. validly obtained abroad by the alien
spouse capacitating him or her to
remarry, the Filipino spouse shall

63
 have capacity to remarry under committed; hence, only one penalty
Philippine law. (As amended by shall be imposed.
Executive Order 227)

32Comment on the Petition for Review on The Lawphil Project - Arellano Law Foundation
Certiorari, rollo, p. 123.

33 Id. at 122.

34 Supra note 23.

G.R. No. 119602. October 6, 2000
35Art. 15. Laws relating to family rights and
duties, or to the status, condition and legal
capacity of persons are binding upon citizens
of the Philippines, even though living abroad. WILDVALLEY SHIPPING CO., LTD. petitioner,
vs. COURT OF APPEALS and PHILIPPINE
36 Supra note 7, at 24. PRESIDENT LINES INC., respondents.

37 Id. DECISION
BUENA, J.:
38G.R. No. L-25441, October 26, 1968, 25
SCRA 616.
This is a petition for review on certiorari seeking
to set aside the decision of the Court of Appeals which
39 Id. at 625-626. (Emphasis supplied) reversed the decision of the lower court in CA-G.R. CV
No. 36821, entitled "Wildvalley Shipping Co., Ltd.,
EDI-Staff builders International, Inc. v.
40
plaintiff-appellant, versus Philippine President Lines,
NLRC, 563 Phil. 1, 22 (2007). Inc., defendant-appellant."

41 Annex "N" to Petition, rollo, p. 84. The antecedent facts of the case are as follows:
Sometime in February 1988, the Philippine
42 399 Phil. 342 (2000). Roxas, a vessel owned by Philippine President Lines,
Inc., private respondent herein, arrived in Puerto
43 Id. at 354. (Emphasis supplied) Ordaz, Venezuela, to load iron ore. Upon the
completion of the loading and when the vessel was
44Bank of America, NT and SA v. American ready to leave port, Mr. Ezzar del Valle Solarzano
Realty Corporation, 378 Phil. 1279, 1296 Vasquez, an official pilot of Venezuela, was designated
(1999). by the harbour authorities in Puerto Ordaz to navigate
the Philippine Roxas through the Orinoco River.[1] He
was asked to pilot the said vessel on February 11,
45G.R. No. 80116, June 30, 1989, 174 SCRA
1988[2]boarding it that night at 11:00 p.m.[3]
653.
The master (captain) of the Philippine Roxas,
46 Rollo, p. 18. Captain Nicandro Colon, was at the bridge together
with the pilot (Vasquez), the vessel's third mate (then
47 Supra note 44. the officer on watch), and a helmsman when the vessel
left the port[4] at 1:40 a.m. on February 12,
1988.[5] Captain Colon left the bridge when the vessel
48 Id.at 1296-1297. (Emphasis supplied)
was under way.[6]
49 543 Phil. 275 (2007). The Philippine Roxas experienced some
vibrations when it entered the San Roque Channel at
50 Id.at 290. mile 172.[7] The vessel proceeded on its way, with the
pilot assuring the watch officer that the vibration was
a result of the shallowness of the channel.[8]
51Section 5(e) and (i) of R.A. No. 9262.
(Emphasis supplied) Between mile 158 and 157, the vessel again
experienced some vibrations.[9] These occurred at 4:12
52 Rollo, p. 15. a.m.[10] It was then that the watch officer called the
master to the bridge.[11]
53In People v. De Leon, 608 Phil. 701, 722 The master (captain) checked the position of the
(2009), it was held that: vessel[12] and verified that it was in the centre of the
channel.[13] He then went to confirm, or set down, the
A continued (continuous or position of the vessel on the chart.[14] He ordered
continuing) crime is defined as a Simplicio A. Monis, Chief Officer of the President
single crime, consisting of a series of Roxas, to check all the double bottom tanks.[15]
acts but all arising from one criminal
resolution. Although there is a series At around 4:35 a.m., the Philippine Roxas ran
of acts, there is only one crime aground in the Orinoco River,[16] thus obstructing the
ingress and egress of vessels.

64
 As a result of the blockage, the Malandrinon, a
vessel owned by herein petitioner Wildvalley Shipping
Company, Ltd., was unable to sail out of Puerto Ordaz
on that day.
Subsequently, Wildvalley Shipping Company, Ltd.
filed a suit with the Regional Trial Court of Manila,
Branch III against Philippine President Lines, Inc. and
Pioneer Insurance Company (the underwriter/insurer
of Philippine Roxas) for damages in the form of
unearned profits, and interest thereon amounting to
US $400,000.00 plus attorney's fees, costs, and
expenses of litigation. The complaint against Pioneer
Insurance Company was dismissed in an Order dated
November 7, 1988.[17]
At the pre-trial conference, the parties agreed on
the following facts:
"1. The jurisdictional facts, as specified in their
respective pleadings;
"2. That defendant PPL was the owner of the vessel
Philippine Roxas at the time of the incident;
"3. That defendant Pioneer Insurance was the
insurance underwriter for defendant PPL;
"4. That plaintiff Wildvalley Shipping Co., Inc. is the
owner of the vessel Malandrinon, whose passage was
obstructed by the vessel Philippine Roxas at Puerto
Ordaz, Venezuela, as specified in par. 4, page 2 of the
complaint;
"5. That on February 12, 1988, while the Philippine
Roxas was navigating the channel at Puerto Ordaz, the
said vessel grounded and as a result, obstructed
navigation at the channel;
"6. That the Orinoco River in Puerto Ordaz is a
compulsory pilotage channel;
"7. That at the time of the incident, the vessel,
Philippine Roxas, was under the command of the pilot
Ezzar Solarzano, assigned by the government thereat,
but plaintiff claims that it is under the command of the
master;
"8. The plaintiff filed a case in Middleburg, Holland
which is related to the present case;
"9. The plaintiff caused the arrest of the Philippine
Collier, a vessel owned by the defendant PPL;
"10. The Orinoco River is 150 miles long and it takes
approximately 12 hours to navigate out of the said
river;
"11. That no security for the plaintiff's claim was given
until after the Philippine Collier was arrested; and
"12. That a letter of guarantee, dated 12-May-88 was
issued by the Steamship Mutual Underwriters Ltd."[18]
The trial court rendered its decision on October
16, 1991 in favor of the petitioner, Wildvalley Shipping
Co., Ltd. The dispositive portion thereof reads as
follows:
"WHEREFORE, judgment is rendered for the plaintiff,
ordering defendant Philippine President Lines, Inc. to
pay to the plaintiff the sum of U.S. $259,243.43, as
actual and compensatory damages, and U.S.
$162,031.53, as expenses incurred abroad for its
foreign lawyers, plus additional sum of U.S.
$22,000.00, as and for attorney's fees of plaintiff's
local lawyer, and to pay the cost of this suit.
"Defendant's counterclaim is dismissed for lack of
merit.
"SO ORDERED."[19]
Both parties appealed: the petitioner appealing
the non-award of interest with the private respondent
questioning the decision on the merits of the case.
After the requisite pleadings had been filed, the
Court of Appeals came out with its questioned decision
dated June 14, 1994,[20] the dispositive portion of
which reads as follows:
"WHEREFORE, finding defendant-appellant's appeal to
be meritorious, judgment is hereby rendered
reversing the Decision of the lower court. Plaintiff-
appellant's Complaint is dismissed and it is ordered to
pay defendant-appellant the amount of Three
Hundred Twenty-three Thousand, Forty-two Pesos
and Fifty-three Centavos (P323,042.53) as and for
attorney's fees plus cost of suit. Plaintiff-appellant's
appeal is DISMISSED.
"SO ORDERED."[21]
Petitioner filed a motion for
reconsideration[22] but the same was denied for lack of
merit in the resolution dated March 29, 1995.[23]
Hence, this petition.
The petitioner assigns the following errors to the
court a quo:
1. RESPONDENT COURT OF APPEALS
SERIOUSLY ERRED IN FINDING THAT
UNDER PHILIPPINE LAW NO FAULT OR
NEGLIGENCE CAN BE ATTRIBUTED TO
THE MASTER NOR THE OWNER OF THE
"PHILIPPINE ROXAS" FOR THE
GROUNDING OF SAID VESSEL
RESULTING IN THE BLOCKAGE OF THE
RIO ORINOCO;
2. RESPONDENT COURT OF APPEALS
SERIOUSLY ERRED IN REVERSING THE
FINDINGS OF FACTS OF THE TRIAL
COURT CONTRARY TO EVIDENCE;
3. RESPONDENT COURT OF APPEALS
SERIOUSLY ERRED IN FINDING THAT
THE "PHILIPPINE ROXAS" IS
SEAWORTHY;
4. RESPONDENT COURT OF APPEALS
SERIOUSLY ERRED IN DISREGARDING
VENEZUELAN LAW DESPITE THE FACT
THAT THE SAME HAS BEEN
SUBSTANTIALLY PROVED IN THE TRIAL
COURT WITHOUT ANY OBJECTION
FROM PRIVATE RESPONDENT, AND
65
 WHOSE OBJECTION WAS INTERPOSED
BELATEDLY ON APPEAL;
5. RESPONDENT COURT OF APPEALS
SERIOUSLY ERRED IN AWARDING
ATTORNEY'S FEES AND COSTS TO
PRIVATE RESPONDENT WITHOUT ANY
FAIR OR REASONABLE BASIS
WHATSOEVER;
6. RESPONDENT COURT OF APPEALS
SERIOUSLY ERRED IN NOT FINDING
THAT PETITIONER'S CAUSE IS
MERITORIOUS HENCE, PETITIONER
SHOULD BE ENTITLED TO ATTORNEY'S
FEES, COSTS AND INTEREST.
The petition is without merit.
The primary issue to be determined is whether or
not Venezuelan law is applicable to the case at bar.
It is well-settled that foreign laws do not prove
themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any
other fact, they must be alleged and proved.[24]
A distinction is to be made as to the manner of
proving a written and an unwritten law. The former
falls under Section 24, Rule 132 of the Rules of Court,
as amended, the entire provision of which is quoted
hereunder. Where the foreign law sought to be proved
is "unwritten," the oral testimony of expert witnesses
is admissible, as are printed and published books of
reports of decisions of the courts of the country
concerned if proved to be commonly admitted in such
courts.[25]
Section 24 of Rule 132 of the Rules of Court, as
amended, provides:
"Sec. 24. Proof of official record. -- The record of public
documents referred to in paragraph (a) of Section 19,
when admissible for any purpose, may be evidenced
by an official publication thereof or by a copy attested
by the officer having the legal custody of the record, or
by his deputy, and accompanied, if the record is not
kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the
record is kept is in a foreign country, the certificate
may be made by a secretary of the embassy or
legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service
of the Philippines stationed in the foreign country in
which the record is kept, and authenticated by the seal
of his office." (Underscoring supplied)
The court has interpreted Section 25 (now
Section 24) to include competent evidence like the
testimony of a witness to prove the existence of a
written foreign law.[26]
In the noted case of Willamette Iron & Steel
Works vs. Muzzal,[27] it was held that:
" Mr. Arthur W. Bolton, an attorney-at-law of San
Francisco, California, since the year 1918 under oath,
quoted verbatim section 322 of the California Civil
Code and stated that said section was in force at the
time the obligations of defendant to the plaintiff were
incurred, i.e. on November 5, 1928 and December 22,
1928. This evidence sufficiently established the fact
that the section in question was the law of the State of
California on the above dates. A reading of sections
300 and 301 of our Code of Civil Procedure will
convince one that these sections do not exclude the
presentation of other competent evidence to prove the
existence of a foreign law.
"`The foreign law is a matter of fact You ask the
witness what the law is; he may, from his recollection,
or on producing and referring to books, say what it is.'
(Lord Campbell concurring in an opinion of Lord Chief
Justice Denman in a well-known English case where a
witness was called upon to prove the Roman laws of
marriage and was permitted to testify, though he
referred to a book containing the decrees of the
Council of Trent as controlling, Jones on Evidence,
Second Edition, Volume 4, pages 3148-3152.) x x x.
We do not dispute the competency of Capt. Oscar
Leon Monzon, the Assistant Harbor Master and Chief
of Pilots at Puerto Ordaz, Venezuela,[28] to testify on
the existence of the Reglamento General de la Ley de
Pilotaje (pilotage law of Venezuela)[29] and
the Reglamento Para la Zona de Pilotaje No1 del
Orinoco (rules governing the navigation of the Orinoco
River). Captain Monzon has held the aforementioned
posts for eight years.[30] As such he is in charge of
designating the pilots for maneuvering and navigating
the Orinoco River. He is also in charge of the
documents that come into the office of the harbour
masters.[31]
Nevertheless, we take note that these written
laws were not proven in the manner provided by
Section 24 of Rule 132 of the Rules of Court.
The Reglamento General de la Ley de Pilotaje was
published in the Gaceta Oficial[32]of the Republic of
Venezuela. A photocopy of the Gaceta Oficial was
presented in evidence as an official publication of the
Republic of Venezuela.
The Reglamento Para la Zona de Pilotaje No 1 del
Orinoco is published in a book issued by the Ministerio
de Comunicaciones of Venezuela.[33] Only a photocopy
of the said rules was likewise presented as evidence.
Both of these documents are considered in
Philippine jurisprudence to be public documents for
they are the written official acts, or records of the
official acts of the sovereign authority, official bodies
and tribunals, and public officers of Venezuela.[34]
For a copy of a foreign public document to be
admissible, the following requisites are
mandatory: (1) It must be attested by the officer
having legal custody of the records or by his deputy;
and (2) It must be accompanied by a certificate by a
secretary of the embassy or legation, consul general,
consul, vice consular or consular agent or foreign
service officer, and with the seal of his office.[35] The
latter requirement is not a mere technicality but is
intended to justify the giving of full faith and credit to
the genuineness of a document in a foreign country.[36]
It is not enough that the Gaceta Oficial, or a book
published by the Ministerio de Comunicaciones of
Venezuela, was presented as evidence with Captain
Monzon attesting it. It is also required by Section 24 of
Rule 132 of the Rules of Court that a certificate that
Captain Monzon, who attested the documents, is the
officer who had legal custody of those records made
by a secretary of the embassy or legation, consul
66
general, consul, vice consul or consular agent or by
any officer in the foreign service of the Philippines
stationed in Venezuela, and authenticated by the seal
of his office accompanying the copy of the public
document. No such certificate could be found in the
records of the case.
With respect to proof of written laws, parol proof
is objectionable, for the written law itself is the best
evidence. According to the weight of authority, when a
foreign statute is involved, the best evidence rule
requires that it be proved by a duly authenticated copy
of the statute.[37]
At this juncture, we have to point out that the
Venezuelan law was not pleaded before the lower
court.
A foreign law is considered to be pleaded if there
is an allegation in the pleading about the existence of
the foreign law, its import and legal consequence on
the event or transaction in issue.[38]
A review of the Complaint[39] revealed that it was
never alleged or invoked despite the fact that the
grounding of the M/V Philippine Roxas occurred
within the territorial jurisdiction of Venezuela.
We reiterate that under the rules of private
international law, a foreign law must be properly
pleaded and proved as a fact. In the absence of
pleading and proof, the laws of a foreign country, or
state, will be presumed to be the same as our own
local or domestic law and this is known as processual
presumption.[40]
Having cleared this point, we now proceed to a
thorough study of the errors assigned by the
petitioner.
Petitioner alleges that there was negligence on
the part of the private respondent that would warrant
the award of damages.
There being no contractual obligation, the private
respondent is obliged to give only the diligence
required of a good father of a family in accordance
with the provisions of Article 1173 of the New Civil
Code, thus:
Art. 1173. The fault or negligence of the obligor
consists in the omission of that diligence which is
required by the nature of the obligation and
corresponds with the circumstances of the persons, of
the time and of the place. When negligence shows bad
faith, the provisions of articles 1171 and 2201,
paragraph 2, shall apply.
If the law or contract does not state the diligence
which is to be observed in the performance, that which
is expected of a good father of a family shall be
required.
The diligence of a good father of a family requires
only that diligence which an ordinary prudent man
would exercise with regard to his own property. This
we have found private respondent to have exercised
when the vessel sailed only after the "main engine,
machineries, and other auxiliaries" were checked and
found to be in good running condition;[41] when the
master left a competent officer, the officer on watch on
the bridge with a pilot who is experienced in
navigating the Orinoco River; when the master
ordered the inspection of the vessel's double bottom
tanks when the vibrations occurred anew.[42]
The Philippine rules on pilotage, embodied in
Philippine Ports Authority Administrative Order No.
03-85, otherwise known as the Rules and Regulations
Governing Pilotage Services, the Conduct of Pilots and
Pilotage Fees in Philippine Ports enunciate the duties
and responsibilities of a master of a vessel and its
pilot, among other things.
The pertinent provisions of the said
administrative order governing these persons are
quoted hereunder:
Sec. 11. Control of Vessels and Liability for Damage. --
On compulsory pilotage grounds, the Harbor Pilot
providing the service to a vessel shall be responsible
for the damage caused to a vessel or to life and
property at ports due to his negligence or fault.He can
be absolved from liability if the accident is caused by
force majeure or natural calamities provided he has
exercised prudence and extra diligence to prevent or
minimize the damage.
The Master shall retain overall command of the vessel
even on pilotage grounds whereby he can
countermand or overrule the order or command of the
Harbor Pilot on board. In such event, any damage
caused to a vessel or to life and property at ports by
reason of the fault or negligence of the Master shall be
the responsibility and liability of the registered owner
of the vessel concerned without prejudice to recourse
against said Master.
Such liability of the owner or Master of the vessel or
its pilots shall be determined by competent authority
in appropriate proceedings in the light of the facts and
circumstances of each particular case.
xxx
Sec. 32. Duties and Responsibilities of the Pilots or
Pilots Association. -- The duties and responsibilities of
the Harbor Pilot shall be as follows:
xxx
f) A pilot shall be held responsible for the direction of
a vessel from the time he assumes his work as a pilot
thereof until he leaves it anchored or berthed safely;
Provided, however, that his responsibility shall cease
at the moment the Master neglects or refuses to carry
out his order."
The Code of Commerce likewise provides for the
obligations expected of a captain of a vessel, to wit:
Art. 612. The following obligations shall be inherent in
the office of captain:
xxx
"7. To be on deck on reaching land and to take
command on entering and leaving ports, canals,
roadsteads, and rivers, unless there is a pilot on board
discharging his duties. x x x.
67
 The law is very explicit. The master remains the
overall commander of the vessel even when there is a
pilot on board. He remains in control of the ship as he
can still perform the duties conferred upon him by
law[43] despite the presence of a pilot who is
temporarily in charge of the vessel. It is not required
of him to be on the bridge while the vessel is being
navigated by a pilot.
However, Section 8 of PPA Administrative Order
No. 03-85, provides:
Sec. 8. Compulsory Pilotage Service - For entering a
harbor and anchoring thereat, or passing through
rivers or straits within a pilotage district, as well as
docking and undocking at any pier/wharf, or shifting
from one berth or another, every vessel engaged in
coastwise and foreign trade shall be under compulsory
pilotage.
xxx.
The Orinoco River being a compulsory pilotage
channel necessitated the engaging of a pilot who was
presumed to be knowledgeable of every shoal, bank,
deep and shallow ends of the river. In his deposition,
pilot Ezzar Solarzano Vasquez testified that he is an
official pilot in the Harbour at Port Ordaz,
Venezuela,[44] and that he had been a pilot for twelve
(12) years.[45] He also had experience in navigating the
waters of the Orinoco River.[46]
The law does provide that the master can
countermand or overrule the order or command of the
harbor pilot on board. The master of the Philippine
Roxas deemed it best not to order him (the pilot) to
stop the vessel,[47] mayhap, because the latter had
assured him that they were navigating normally
before the grounding of the vessel.[48] Moreover, the
pilot had admitted that on account of his experience he
was very familiar with the configuration of the river as
well as the course headings, and that he does not even
refer to river charts when navigating the Orinoco
River.[49]
Based on these declarations, it comes as no
surprise to us that the master chose not to regain
control of the ship. Admitting his limited knowledge of
the Orinoco River, Captain Colon relied on the
knowledge and experience of pilot Vasquez to guide
the vessel safely.
Licensed pilots, enjoying the emoluments of
compulsory pilotage, are in a different class from
ordinary employees, for they assume to have a skill
and a knowledge of navigation in the particular waters
over which their licenses extend superior to that of the
master; pilots are bound to use due diligence and
reasonable care and skill. A pilot's ordinary skill is in
proportion to the pilot's responsibilities, and implies a
knowledge and observance of the usual rules of
navigation, acquaintance with the waters piloted in
their ordinary condition, and nautical skill in avoiding
all known obstructions. The character of the skill and
knowledge required of a pilot in charge of a vessel on
the rivers of a country is very different from that
which enables a navigator to carry a vessel safely in
the ocean. On the ocean, a knowledge of the rules of
navigation, with charts that disclose the places of
hidden rocks, dangerous shores, or other dangers of
the way, are the main elements of a pilot's knowledge
and skill. But the pilot of a river vessel, like the harbor
pilot, is selected for the individual's personal
knowledge of the topography through which the
vessel is steered."[50]
We find that the grounding of the vessel is
attributable to the pilot. When the vibrations were
first felt the watch officer asked him what was going
on, and pilot Vasquez replied that "(they) were in the
middle of the channel and that the vibration was as
(sic) a result of the shallowness of the channel."[51]
Pilot Ezzar Solarzano Vasquez was assigned to
pilot the vessel Philippine Roxas as well as other
vessels on the Orinoco River due to his knowledge of
the same. In his experience as a pilot, he should have
been aware of the portions which are shallow and
which are not. His failure to determine the depth of the
said river and his decision to plod on his set course, in
all probability, caused damage to the vessel. Thus, we
hold him as negligent and liable for its grounding.
In the case of Homer Ramsdell Transportation
Company vs. La Compagnie Generale
Transatlantique, 182 U.S. 406, it was held that:
x x x The master of a ship, and the owner also, is liable
for any injury done by the negligence of the crew
employed in the ship. The same doctrine will apply to
the case of a pilot employed by the master or owner,
by whose negligence any injury happens to a third
person or his property: as, for example, by a collision
with another ship, occasioned by his negligence. And it
will make no difference in the case that the pilot, if any
is employed, is required to be a licensed pilot;
provided the master is at liberty to take a pilot, or not,
at his pleasure, for in such a case the master acts
voluntarily, although he is necessarily required to
select from a particular class. On the other hand, if it is
compulsive upon the master to take a pilot, and, a
fortiori, if he is bound to do so under penalty, then,
and in such case, neither he nor the owner will be
liable for injuries occasioned by the negligence of
the pilot; for in such a case the pilot cannot be
deemed properly the servant of the master or the
owner, but is forced upon them, and the maxim Qui
facit per alium facit per se does not apply."
(Underscoring supplied)
Anent the river passage plan, we find that, while
there was none,[52] the voyage has been sufficiently
planned and monitored as shown by the following
actions undertaken by the pilot, Ezzar Solarzano
Vasquez, to wit: contacting the radio marina via VHF
for information regarding the channel, river
traffic,[53] soundings of the river, depth of the river,
bulletin on the buoys.[54] The officer on watch also
monitored the voyage.[55]
We, therefore, do not find the absence of a river
passage plan to be the cause for the grounding of the
vessel.
The doctrine of res ipsa loquitur does not apply to
the case at bar because the circumstances surrounding
the injury do not clearly indicate negligence on the
part of the private respondent. For the said doctrine to
apply, the following conditions must be met: (1) the
accident was of such character as to warrant an
inference that it would not have happened except for
defendant's negligence; (2) the accident must have
68
been caused by an agency or instrumentality within
the exclusive management or control of the person
charged with the negligence complained of; and (3)
the accident must not have been due to any voluntary
action or contribution on the part of the person
injured.[56]
As has already been held above, there was a
temporary shift of control over the ship from the
master of the vessel to the pilot on a compulsory
pilotage channel. Thus, two of the requisites necessary
for the doctrine to apply, i.e., negligence and control, to
render the respondent liable, are absent.
As to the claim that the ship was unseaworthy,
we hold that it is not.
The Lloyds Register of Shipping confirmed the
vessels seaworthiness in a Confirmation of Class
issued on February 16, 1988 by finding that "the above
named ship (Philippine Roxas) maintained the class
"+100A1 Strengthened for Ore Cargoes, Nos. 2 and 8
Holds may be empty (CC) and +LMC" from 31/12/87
up until the time of casualty on or about
12/2/88."[57] The same would not have been issued
had not the vessel been built according to the
standards set by Lloyd's.
Samuel Lim, a marine surveyor, at Lloyd's
Register of Shipping testified thus:
"Q Now, in your opinion, as a surveyor, did top side
tank have any bearing at all to the
seaworthiness of the vessel?
"A Well, judging on this particular vessel, and also
basing on the class record of the vessel,
wherein recommendations were made on the
top side tank, and it was given sufficient time
to be repaired, it means that the vessel is fit to
travel even with those defects on the ship.
"COURT
What do you mean by that? You explain. The vessel
is fit to travel even with defects? Is that what
you mean? Explain.
"WITNESS
"A Yes, your Honor. Because the class society which
register (sic) is the third party looking into
the condition of the vessel and as far as their
record states, the vessel was class or
maintained, and she is fit to travel during that
voyage."
xxx
"ATTY. MISA
Before we proceed to other matter, will you kindly
tell us what is (sic) the 'class +100A1
Strengthened for Ore Cargoes', mean?
"WITNESS
"A Plus 100A1 means that the vessel was built
according to Lloyd's rules and she is capable
of carrying ore bulk cargoes, but she is
particularly capable of carrying Ore Cargoes
with No. 2 and No. 8 holds empty.
xxx
"COURT
The vessel is classed, meaning?
"A Meaning she is fit to travel, your Honor, or
seaworthy."[58]
It is not required that the vessel must be
perfect. To be seaworthy, a ship must be reasonably fit
to perform the services, and to encounter the ordinary
perils of the voyage, contemplated by the parties to the
policy.[59]
As further evidence that the vessel was
seaworthy, we quote the deposition of pilot Vasquez:
"Q Was there any instance when your orders or
directions were not complied with because of
the inability of the vessel to do so?
"A No.
"Q. Was the vessel able to respond to all your
commands and orders?
"A. The vessel was navigating normally.[60]
Eduardo P. Mata, Second Engineer of the
Philippine Roxas submitted an accident report
wherein he stated that on February 11, 1988, he
checked and prepared the main engine, machineries
and all other auxiliaries and found them all to be in
good running condition and ready for
maneuvering. That same day the main engine, bridge
and engine telegraph and steering gear motor were
also tested.[61] Engineer Mata also prepared the fuel for
consumption for maneuvering and checked the engine
generators.[62]
Finally, we find the award of attorneys fee
justified.
Article 2208 of the New Civil Code provides that:
"Art. 2208. In the absence of stipulation, attorney's
fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:
xxx
"(11) In any other case where the court deems it just
and equitable that attorney's fees and expenses of
litigation should be recovered.
xxx
Due to the unfounded filing of this case, the
private respondent was unjustifiably forced to litigate,
thus the award of attorneys fees was proper.
WHEREFORE, IN VIEW OF THE FOREGOING, the
petition is DENIEDand the decision of the Court of
Appeals in CA G.R. CV No. 36821 is AFFIRMED.
SO ORDERED.
Bellosillo, (Chairman), Mendoza,
Quisumbing, and De leon, Jr., JJ., concur.
[1] vide
Exhibit FF (Deposition upon Oral Examination
of Oscar Leon Monzon, June 14, 1990), p. 9; Exhibit EE
(Deposition upon Oral Examination of Ezzar del Valle
Solarzano Vasquez, June 13, 1990), p. 47.
[2] Exhibit EE, p. 9.
69
[3] Ibid., p. 9. [38] Jovito R. Salonga, Private International Law, p. 82.
[4] Ibid., p. 13. [39] Original Records, p. 1.
[5] Ibid., p. 9. [40] YaoKee vs. Sy-Gonzales, supra; In re: Testate Estate
[6] Ibid.,
of Suntay, 95 Phil. 500, 510-511; Miciano vs. Brimo, 50
p. 13. Phil. 867; Lim and Lim vs. Collector of Customs, 36
[7] Ibid., p. 13. Phil. 472.
[8] Ibid., [41] Exhibit "E-4."
p. 14.
[9] Ibid., [42] Exhibit "E-2."
p. 18; Exhibit E-1.
[10] Ibid., [43] Article 612 of the Code of Commerce.
p. 21.
[11] Ibid., [44] Exhibit "EE", p. 8.
p. 22.
[12] Ibid., [45] Ibid., p. 8.
p. 22; Exhibit "E-2."
[13] Ibid., [46] Ibid., p. 8.
p. 22.
[14] Ibid., [47] Ibid., p. 26.
p. 26.
[15] Exhibit [48] Ibid., pp. 52 and 58.
"E-2."
[16] Exhibit [49] Ibid., p. 33.
"EE", p. 29; Exhibit "E-1."
[17] Original [50]70 Am Jur 2d, Shipping Sec. 290.
Records, p. 209.
[18] Ibid., [51] Exhibit "EE", p. 14.
pp. 639-640.
[19] Ibid., [52] Comment to Petition for Review on Certiorari, p.
p. 1029.
21; Rollo, p. 283.
[20] Annex "A"; Rollo, p 75.
[53] Exhibit "EE", pp. 10-11.
[21] Ibid., p. 85.
[54] Ibid., p. 12.
[22] Annex "C"; Ibid., p. 89.
[55] vide Exhibit "E-2."
[23] Annex "B"; Ibid., p. 86.
[56] 57B Am Jur 2d, Negligence, Sec. 1848.
[24] Zalameavs. Court of Appeals, 228 SCRA 23 [1993]
[57] Exhibit "3."
citing The Collector of Internal Revenue vs. Fisher and
Fisher vs. The Collector of Internal Revenue, 110 Phil. [58] T.S.N. dated March 14, 1991, pp. 26-27, 36, and 75.
686 [1961]; Yao Kee vs. Sy- Gonzales, 167 SCRA 736
[1988]; vide Sy Joc Lieng vs. Sy Quia, 16 Phil. 137, Yam [59] Section 107, Act 2427 (The Insurance Act).
Ka Lim vs. Collector of Customs, 30 Phil. 46, In re [60] Exhibit
Estate of Johnson, 39 Phil. 156, Fluemer vs. Hix, 54 "EE", p. 48.
Phil. 610. [61] Exhibit "E-4."
[25] VicenteJ. Francisco, The Revised Rules of Court in [62] T.S.N. dated December 7, 1990, p. 8.
the Philippines, Volume VII, Part I, 1997 ed., p. 626
citing Secs. 36 and 49, Rule 130, Rules of Court, as
amended.
[26] Yao
CRESCENT PETROLEUM, LTD., G.R. No. 155014
Kee vs. Sy-Gonzales, supra, pp. 744-745.
Petitioner,
[27] 61 Phil. 471, 475.
[28] Exhibit
Present:
"FF", p. 9.
[29] Ibid., p. 39. Puno, J.,
[30] Exhibit "FF", p. 9. - versus - Chairman,
[31] Ibid., p. 9.
Austria-Martinez,
[32] Exhibit "V."
Callejo, Sr.,
[33] Exhibit "W."
[34] Section 19, Rule 132 of the Rules of court, as T
amended. i
[35] Section
n
24, Rule 132 of the Rules of Court, as
g
amended.
a
[36] Valencia vs. Lopez, (CA), 65 OG 9959. ,
[37] Vicente
J. Francisco, The Revised Rules of Court in
the Philippines, Volume VII, Part II, 1997 ed., p. 365, a
citing 20 Am. Jur. 371-372.

70
 n
d chartered by respondent SCI to Halla Merchant Marine
*Chico-Nazario, JJ.
Co. Ltd. (Halla), a South Korean company. Halla, in
M/V LOK MAHESHWARI,
turn, sub-chartered the Vessel through a time charter
THE SHIPPING CORPORATION
to Transmar Shipping, Inc. (Transmar). Transmar
OF INDIA, and PORTSERV LIMITED Promulgated:

and/or TRANSMAR SHIPPING, INC., further sub-chartered the Vessel to Portserv Limited

Respondents. November 11, 2005 (Portserv). Both Transmar and Portserv are

x-----------------------------------------
corporations organized and existing under the laws of
---------x

Canada.

DECISION
On or about November 1, 1995, Portserv

requested petitioner Crescent Petroleum, Ltd.

PUNO, J.:
(Crescent), a corporation organized and existing under

the laws of Canada that is engaged in the business of

This petition for review on certiorari under Rule 45

selling petroleum and oil products for the use and

seeks the (a) reversal of the November 28, 2001

operation of oceangoing vessels, to deliver marine fuel

Decision of the Court of Appeals in CA-G.R. No. CV-

oils (bunker fuels) to the Vessel. Petitioner Crescent

54920,[1] which dismissed for want of jurisdiction the

granted and confirmed the request through an advice

instant case, and the September 3, 2002 Resolution of

via facsimile dated November 2, 1995. As security for

the same appellate court,[2] which denied petitioners

the payment of the bunker fuels and related services,

motion for reconsideration, and (b) reinstatement of

petitioner Crescent received two (2) checks in the

the July 25, 1996 Decision[3] of the Regional Trial

amounts of US$100,000.00 and US$200,000.00. Thus,

Court (RTC) in Civil Case No. CEB-18679, which held

petitioner Crescent contracted with its supplier,

that respondents were solidarily liable to pay

Marine Petrobulk Limited (Marine Petrobulk), another

petitioner the sum prayed for in the complaint.

Canadian corporation, for the physical delivery of the

The facts are as follows: Respondent M/V Lok
bunker fuels to the Vessel.
Maheshwari (Vessel) is an oceangoing vessel of Indian

On or about November 4, 1995, Marine

registry that is owned by respondent Shipping

Petrobulk delivered the bunker fuels amounting to

Corporation of India (SCI), a corporation organized

US$103,544 inclusive of barging and demurrage

and existing under the laws of India and principally

charges to the Vessel at the port of Pioneer Grain,

owned by the Government of India. It was time-

71
Vancouver, Canada. The Chief Engineer Officer of the Transmar. The case was raffled to Branch 10 and

Vessel duly acknowledged and received the delivery docketed as Civil Case No. CEB-18679.

receipt. Marine Petrobulk issued an invoice to

On May 3, 1996, the trial court issued a writ of
petitioner Crescent for the US$101,400.00 worth of
attachment against the Vessel with bond
the bunker fuels. Petitioner Crescent issued a check for
at P2,710,000.00. Petitioner Crescent withdrew its
the same amount in favor of Marine Petrobulk, which
prayer for a temporary restraining order and posted
check was duly encashed.
the required bond.

Having paid Marine Petrobulk, petitioner

On May 18, 1996, summonses were served to
Crescent issued a revised invoice dated November 21,
respondents Vessel and SCI, and Portserv and/or
1995 to Portserv Limited, and/or the Master, and/or
Transmar through the Master of the Vessel. On May
Owners, and/or Operators, and/or Charterers of M/V
28, 1996, respondents Vessel and SCI, through Pioneer
Lok Maheshwari in the amount of US$103,544.00 with
Insurance and Surety Corporation (Pioneer), filed an
instruction to remit the amount on or before
urgent ex-parte motion to approve Pioneers letter of
December 1, 1995. The period lapsed and several
undertaking, to consider it as counter-bond and to
demands were made but no payment was received.
discharge the attachment. On May 29, 1996, the trial
Also, the checks issued to petitioner Crescent as
court granted the motion; thus, the letter of
security for the payment of the bunker fuels were
undertaking was approved as counter-bond to
dishonored for insufficiency of funds. As a
discharge the attachment.
consequence, petitioner Crescent incurred additional

For failing to file their respective answers and upon

expenses of US$8,572.61 for interest, tracking fees,

motion of petitioner Crescent, the trial court declared

and legal fees.

respondents Vessel and SCI, Portserv and/or

On May 2, 1996, while the Vessel was docked
Transmar in default. Petitioner Crescent was allowed
at the port of Cebu City, petitioner Crescent instituted
to present its evidence ex-parte.
before the RTC of Cebu City an action for a sum of
On July 25, 1996, the trial court rendered its decision
money with prayer for temporary restraining order
in favor of petitioner Crescent, thus:
and writ of preliminary attachment against
WHEREFORE, premises
considered, judgment is hereby
respondents Vessel and SCI, Portserv and/or rendered in favor of plaintiff
[Crescent] and against the
defendants [Vessel, SCI, Portserv
and/or Transmar].

72
 Consequently, the latter are hereby
ordered to pay plaintiff jointly and construction, validity and performance of the
solidarily, the following:
contract. They likewise submitted certified copies of

(a) the sum of the Commercial Instruments and Maritime Lien Act of
US$103,544.00,
representing the the United States (U.S.), some U.S. cases, and some
outstanding
obligation; Canadian cases to support their defense.

(b) interest of
US$10,978.50 as On November 28, 2001, the Court of Appeals
of July 3, 1996,
plus additional issued its assailed Decision, which reversed that of the
interest at 18%
per annum for trial court, viz:
the period WHEREFORE, premises
thereafter, until considered, the Decision dated July
the principal 25, 1996, issued by the Regional
account is fully Trial Court of Cebu City, Branch 10,
is hereby REVERSED and SET ASIDE,
paid;
and a new one is entered
DISMISSING the instant case for
(c) attorneys fees want of jurisdiction.
of P300,000.00; and

(d) P200,000.00 as
litigation expenses. The appellate court denied petitioner

Crescents motion for reconsideration explaining that

SO ORDERED.
it dismissed the instant action primarily on the

ground of forum non conveniens considering that the

On August 19, 1996, respondents Vessel and
parties are foreign corporations which are not doing
SCI appealed to the Court of Appeals. They attached
business in the Philippines.
copies of the charter parties between respondent SCI

Hence, this petition submitting the following issues

and Halla, between Halla and Transmar, and between

for resolution, viz:

Transmar and Portserv. They pointed out that
1. Philippine courts have
jurisdiction over a foreign
Portserv was a time charterer and that there is a vessel found inside
Philippine waters for the
clause in the time charters between respondent SCI enforcement of a maritime
lien against said vessel
and/or its owners and
and Halla, and between Halla and Transmar, which operators;

states that the Charterers shall provide and pay for all 2. The principle of
forum non conveniens is
the fuel except as otherwise agreed. They submitted a inapplicable to the instant
case;

copy of Part II of the Bunker Fuel Agreement between 3. The trial court acquired
jurisdiction over the subject
petitioner Crescent and Portserv containing a matter of the instant case,
as well as over the res and
over the persons of the
stipulation that New York law governs the
parties;

73
 4. The enforcement of a admiralty and maritime where the demand or claim
maritime lien on the subject
vessel is expressly granted
by law. The Ship Mortgage exceeds two hundred thousand pesos (P200,000) or in
Acts as well as the Code of
Commerce provides for Metro Manila, where such demand or claim exceeds
relief to petitioner for its
unpaid claim;
four hundred thousand pesos (P400,000). Two (2)
5. The arbitration clause in
the contract was not rigid tests have been used to determine whether a case
or inflexible but expressly
allowed petitioner to involving a contract comes within the admiralty and
enforce its maritime lien in
Philippine courts provided
the vessel was in the maritime jurisdiction of a court - the locational
Philippines;
test and the subject matter test. The English rule
6. The law of the state of
New York is inapplicable to
follows the locational test wherein maritime and
the present controversy as
the same has not been
properly pleaded and admiralty jurisdiction, with a few exceptions, is
proved;
exercised only on contracts made upon the sea and to
7. Petitioner has legal
capacity to sue before
Philippine courts as it is be executed thereon. This is totally rejected under the
suing upon an isolated
business transaction; American rule where the criterion in determining

8. Respondents were duly

whether a contract is maritime depends on the nature
served summons although
service of summons upon
respondents is not a and subject matter of the contract, having reference to
jurisdictional requirement,
the action being a suit quasi maritime service and transactions.[4] In International
in rem;

9. The trial courts decision Harvester Company of the Philippines v.

has factual and legal bases;
and, Aragon,[5] we adopted the American rule and held that

10. The respondents should (w)hether or not a contract is maritime depends not
be held jointly and
solidarily liable.
on the place where the contract is made and is to be

executed, making the locality the test, but on the

In a nutshell, this case is for the satisfaction
subject matter of the contract, making the true
of unpaid supplies furnished by a foreign supplier in a
criterion a maritime service or a maritime transaction.
foreign port to a vessel of foreign registry that is

owned, chartered and sub-chartered by foreign A contract for furnishing supplies like the one

entities. involved in this case is maritime and within the

jurisdiction of admiralty.[6] It may be invoked before

Under Batas Pambansa Bilang 129, as
our courts through an action in rem or quasi in rem or
amended by Republic Act No. 7691, RTCs exercise
an action in personam. Thus: [7]
exclusive original jurisdiction (i)n all actions in
xxx

74
 Articles 579 and 584 [of the
Code of Commerce] provide a
method of collecting or enforcing not
only the liens created under Section
580 but also for the collection of any
kind of lien whatsoever.[8] In the
Philippines, we have a complete
legislation, both substantive and
adjective, under which to bring an
action in rem against a vessel for the
purpose of enforcing liens. The
substantive law is found in Article
580 of the Code of Commerce. The
procedural law is to be found in
Article 584 of the same Code. The
result is, therefore, that in the
Philippines any vessel even though it
be a foreign vessel found in any port
of this Archipelago may be attached
and sold under the substantive law
which defines the right, and the
procedural law contained in the
Code of Commerce by which this
right is to be enforced.[9] x x x. But
where neither the law nor the
contract between the parties creates
any lien or charge upon the vessel,
the only way in which it can be
seized before judgment is by
pursuing the remedy relating to
attachment under Rule 59 [now Rule
57] of the Rules of Court.[10]
But, is petitioner Crescent entitled to a
maritime lien under our laws? Petitioner Crescent
bases its claim of a maritime lien on Sections
21, 22 and 23 of Presidential Decree No. 1521 (P.D.
No. 1521), also known as the Ship Mortgage Decree
of 1978, viz:
Sec. 21. Maritime Lien for
Necessaries; persons entitled to
such lien. - Any person furnishing
repairs, supplies, towage, use of dry
dock or maritime railway, or other
necessaries, to any vessel, whether
foreign or domestic, upon the order
of the owner of such vessel, or of a
person authorized by the owner,
shall have a maritime lien on the
vessel, which may be enforced by
suit in rem, and it shall be necessary
to allege or prove that credit was
given to the vessel.
Sec. 22. Persons Authorized
to Procure Repairs, Supplies and
Necessaries. - The following persons
shall be presumed to have authority
from the owner to procure repairs,
supplies, towage, use of dry dock or
marine railway, and other
necessaries for the vessel: The
managing owner, ships husband,
master or any person to whom the
management of the vessel at the
port of supply is entrusted. No
person tortuously or unlawfully in
possession or charge of a vessel
shall have authority to bind the
vessel.
Sec. 23. Notice to Person
Furnishing Repairs, Supplies and
Necessaries. - The officers and
agents of a vessel specified in
Section 22 of this Decree shall be
taken to include such officers and
agents when appointed by a
charterer, by an owner pro hac vice,
or by an agreed purchaser in
possession of the vessel; but nothing
in this Decree shall be construed to
confer a lien when the furnisher
knew, or by exercise of reasonable
diligence could have ascertained,
that because of the terms of a
charter party, agreement for sale of
the vessel, or for any other reason,
the person ordering the repairs,
supplies, or other necessaries was
without authority to bind the vessel
therefor.
Petitioner Crescent submits that these
provisions apply to both domestic and foreign vessels,
as well as domestic and foreign suppliers of
necessaries. It contends that the use of the term any
person in Section 21 implies that the law is not
restricted to domestic suppliers but also includes all
persons who supply provisions and necessaries to a
vessel, whether foreign or domestic. It points out
further that the law does not indicate that the supplies
or necessaries must be furnished in the Philippines in
order to give petitioner the right to seek enforcement
of the lien with a Philippine court.[11]
75
 Respondents Vessel and SCI, on the other One. In a suit to establish and enforce a

hand, maintain that Section 21 of the P.D. No. 1521 or maritime lien for supplies furnished to a vessel in a

the Ship Mortgage Decree of 1978 does not apply to a foreign port, whether such lien exists, or whether the

foreign supplier like petitioner Crescent as the court has or will exercise jurisdiction, depends on

provision refers only to a situation where the person the law of the country where the supplies were

furnishing the supplies is situated inside the territory furnished, which must be pleaded and proved.[15] This

of the Philippines and not where the necessaries were principle was laid down in the 1888 case of The

furnished in a foreign jurisdiction like Canada.[12] Scotia,[16] reiterated in The Kaiser Wilhelm

II[17] (1916), in The Woudrichem[18] (1921) and

We find against petitioner Crescent.
in The City of Atlanta[19] (1924).

I.
Two. The Lauritzen-Romero-Rhoditis

P.D. No. 1521 or the Ship Mortgage Decree of trilogy of cases, which replaced such single-factor

1978 was enacted to accelerate the growth and methodologies as the law of the place of supply.[20]

development of the shipping industry and to extend

In Lauritzen v. Larsen,[21] a Danish
the benefits accorded to overseas shipping under
seaman, while temporarily in New York, joined the
Presidential Decree No. 214 to domestic shipping.[13] It
crew of a ship of Danish flag and registry that is
is patterned closely from the U.S. Ship Mortgage Act of
owned by a Danish citizen. He signed the ships
1920 and the Liberian Maritime Law relating to
articles providing that the rights of the crew
preferred mortgages.[14] Notably, Sections 21, 22 and
members would be governed by Danish law and
23 of P.D. No. 1521 or the Ship Mortgage Decree of
by the employers contract with the Danish
1978 are identical to Subsections P, Q, and R,
Seamens Union, of which he was a member. While
respectively, of the U.S. Ship Mortgage Act of 1920,
in Havana and in the course of his employment, he
which is part of the Federal Maritime Lien Act. Hence,
was negligently injured. He sued the shipowner in
U.S. jurisprudence finds relevance to determining
a federal district court in New York for damages
whether P.D. No. 1521 or the Ship Mortgage Decree of
under the Jones Act. In holding that Danish law
1978 applies in the present case.
and not the Jones Act was applicable, the Supreme

The various tests used in the U.S. to determine Court adopted a multiple-contact test to

whether a maritime lien exists are the following: determine, in the absence of a specific

76
 Congressional directive as to the statutes reach, coming from either originating or terminating in the

which jurisdictions law should be applied. The U.S. The contract of employment provided that Greek

following factors were considered: (1) place of law and a Greek collective bargaining agreement

the wrongful act; (2) law of the flag; (3) would apply between the employer and the seaman

allegiance or domicile of the injured; (4) and that all claims arising out of the employment

allegiance of the defendant shipowner; (5) contract were to be adjudicated by a Greek court. The

place of contract; (6) inaccessibility of foreign U.S. Supreme Court observed that of the seven

forum; and (7) law of the forum. factors listed in the Lauritzen test, four were in

favor of the shipowner and against jurisdiction. In

Several years after Lauritzen, the U.S.
arriving at the conclusion that the Jones Act applies, it
Supreme Court in the case of Romero v.
ruled that the application of the Lauritzen test is not a
International Terminal Operating Co.[22] again
mechanical one. It stated thus: [t]he significance of one
considered a foreign seamans personal injury claim
or more factors must be considered in light of the
under both the Jones Act and the general maritime
national interest served by the assertion of Jones Act
law. The Court held that the factors first announced in
jurisdiction. (footnote omitted) Moreover, the list of
the case of Lauritzen were applicable not only to
seven factors in Lauritzen was not intended to be
personal injury claims arising under the Jones Act
exhaustive. x x x [T]he shipowners base of operations
but to all matters arising under maritime law in
is another factor of importance in determining
general.[23]
whether the Jones Act is applicable; and there well

Hellenic Lines, Ltd. v. Rhoditis[24] was also a may be others.

suit under the Jones Act by a Greek seaman injured

The principles enunciated in these maritime
aboard a ship of Greek registry while in American
tort cases have been extended to cases involving
waters. The ship was operated by a Greek corporation
unpaid supplies and necessaries such as the
which has its largest office in New York and another
cases of Forsythe International U.K., Ltd. v. M/V
office in New Orleans and whose stock is more than
Ruth Venture,[25]and Comoco Marine Services v.
95% owned by a U.S. domiciliary who is also a Greek
M/V El Centroamericano.[26]
citizen. The ship was engaged in regularly scheduled

runs between various ports of the U.S. and the Middle Three. The factors provided in

East, Pakistan, and India, with its entire income Restatement (Second) of Conflicts of Law have also

77
been applied, especially in resolving cases brought maritime lien as well as the statutory directives found

under the Federal Maritime Lien Act. Their application in the Maritime Lien Statute and that the initial

suggests that in the absence of an effective choice of choice of law determination is significantly

law by the parties, the forum contacts to be considered affected by the statutory policies surrounding a

include: (a) the place of contracting; (b) the place of maritime lien. It ruled that the facts in the case call

negotiation of the contract; (c) the place of for the application of the Restatement (Second) of

performance; (d) the location of the subject matter of Conflicts of Law. The U.S. Court gave much significance

the contract; and (e) the domicile, residence, to the congressional intent in enacting the Maritime

nationality, place of incorporation and place of Lien Statute to protect the interests of American

business of the parties.[27] supplier of goods, services or necessaries by making

maritime liens available where traditional services are

In Gulf Trading and Transportation Co. v.
routinely rendered. It concluded that the Maritime
The Vessel Hoegh Shield,[28] an admiralty action in
Lien Statute represents a relevant policy of the forum
rem was brought by an American supplier against a
that serves the needs of the international legal system
vessel of Norwegian flag owned by a Norwegian
as well as the basic policies underlying maritime law.
Company and chartered by a London time charterer
The court also gave equal importance to the
for unpaid fuel oil and marine diesel oil delivered
predictability of result and protection of justified
while the vessel was in U.S. territory. The contract was
expectations in a particular field of law. In the
executed in London. It was held that because the
maritime realm, it is expected that when necessaries
bunker fuel was delivered to a foreign flag vessel
are furnished to a vessel in an American port by an
within the jurisdiction of the U.S., and because the
American supplier, the American Lien Statute will
invoice specified payment in the U.S., the admiralty
apply to protect that supplier regardless of the place
and maritime law of the U.S. applied. The U.S. Court of
where the contract was formed or the nationality of
Appeals recognized the modern approach to maritime
the vessel.
conflict of law problems introduced in the Lauritzen

case. However, it observed that Lauritzen involved a The same principle was applied in the case

torts claim under the Jones Act while the present claim of Swedish Telecom Radio v. M/V Discovery

involves an alleged maritime lien arising from unpaid I[29] where the American court refused to apply the

supplies. It made a disclaimer that its conclusion is Federal Maritime Lien Act to create a maritime lien for

limited to the unique circumstances surrounding a goods and services supplied by foreign companies in

78
foreign ports. In this case, a Swedish company 1521 or the Ship Mortgage Decree of 1978 and hold

supplied radio equipment in a Spanish port to that a maritime lien exists.

refurbish a Panamanian vessel damaged by fire. Some

First. Out of the seven basic factors listed
of the contract negotiations occurred in Spain and the
in the case of Lauritzen, Philippine law only falls
agreement for supplies between the parties indicated
under one the law of the forum. All other elements
Swedish companys willingness to submit to Swedish
are foreign Canada is the place of the wrongful act,
law. The ship was later sold under a contract of
of the allegiance or domicile of the injured and the
purchase providing for the application of New York
place of contract; India is the law of the flag and
law and was arrested in the U.S. The U.S. Court of
the allegiance of the defendant shipowner.
Appeals also held that while the contacts-based
Balancing these basic interests, it is inconceivable
framework set forth in Lauritzen was useful in the
that the Philippine court has any interest in the
analysis of all maritime choice of law situations, the
case that outweighs the interests of Canada or
factors were geared towards a seamans injury claim.
India for that matter.
As in Gulf Trading, the lien arose by operation of law

because the ships owner was not a party to the Second. P.D. No. 1521 or the Ship Mortgage

contract under which the goods were supplied. As a Decree of 1978 is inapplicable following the factors

result, the court found it more appropriate to consider under Restatement (Second) of Conflict of Laws. Like

the factors contained in Section 6 of the Restatement the Federal Maritime Lien Act of the U.S., P.D. No. 1521

(Second) of Conflicts of Law. The U.S. Court held that or the Ship Mortgage Decree of 1978 was enacted

the primary concern of the Federal Maritime Lien Act primarily to protect Filipino suppliers and was not

is the protection of American suppliers of goods and intended to create a lien from a contract for supplies

services. between foreign entities delivered in a foreign port.

The same factors were applied in the case Third. Applying P.D. No. 1521 or the Ship

of Ocean Ship Supply, Ltd. v. M/V Leah.[30] Mortgage Decree of 1978 and rule that a maritime lien

exists would not promote the public policy behind the

II.
enactment of the law to develop the domestic shipping

Finding guidance from the foregoing industry. Opening up our courts to foreign suppliers

decisions, the Court cannot sustain petitioner by granting them a maritime lien under our laws even

Crescents insistence on the application of P.D. No.

79
if they are not entitled to a maritime lien under their Trading and Swedish Telecom, the lien that is the

laws will encourage forum shopping. subject matter of this case arose by operation of law

and not by contract because the shipowner was not a

Finally. The submission of petitioner is not in
party to the contract under which the goods were
keeping with the reasonable expectation of the parties
supplied.
to the contract. Indeed, when the parties entered into

a contract for supplies in Canada, they could not have It is worthy to note that petitioner Crescent

intended the laws of a remote country like the never alleged and proved Canadian law as basis for the

Philippines to determine the creation of a lien by the existence of a maritime lien. To the end, it insisted on

mere accident of the Vessels being in Philippine its theory that Philippine law applies. Petitioner

territory. contends that even if foreign law applies, since the

same was not properly pleaded and proved, such

III.
foreign law must be presumed to be the same as

But under which law should petitioner Crescent prove Philippine law pursuant to the doctrine of processual

the existence of its maritime lien? presumption.

In light of the interests of the various foreign elements Thus, we are left with two choices: (1) dismiss

involved, it is clear that Canada has the most the case for petitioners failure to establish a cause of

significant interest in this dispute. The injured party is action[31] or (2) presume that Canadian law is the

a Canadian corporation, the sub-charterer which same as Philippine law. In either case, the case has to

placed the orders for the supplies is also Canadian, the be dismissed.

entity which physically delivered the bunker fuels is in

It is well-settled that a party whose cause of
Canada, the place of contracting and negotiation is in
action or defense depends upon a foreign law has the
Canada, and the supplies were delivered in Canada.
burden of proving the foreign law. Such foreign law is

The arbitration clause contained in the treated as a question of fact to be properly pleaded

Bunker Fuel Agreement which states that New York and proved.[32] Petitioner Crescents insistence on

law governs the construction, validity and enforcing a maritime lien before our courts depended

performance of the contract is only a factor that may on the existence of a maritime lien under the proper

be considered in the choice-of-law analysis but is not law. By erroneously claiming a maritime lien under

conclusive. As in the cases of Gulf Philippine law instead of proving that a maritime lien

80
exists under Canadian law, petitioner Crescent failed Third. It was not established that credit

to establish a cause of action.[33] was extended to the vessel. It is presumed that in

the absence of fraud or collusion, where advances

Even if we apply the doctrine of processual
are made to a captain in a foreign port, upon his
presumption, the result will still be the same. Under
request, to pay for necessary repairs or supplies
P.D. No. 1521 or the Ship Mortgage Decree of 1978, the
to enable his vessel to prosecute her voyage, or to
following are the requisites for maritime liens on
pay harbor dues, or for pilotage, towage and like
necessaries to exist: (1) the necessaries must have
services rendered to the vessel, that they are
been furnished to and for the benefit of the vessel; (2)
made upon the credit of the vessel as well as upon
the necessaries must have been necessary for the
that of her owners.[36] In this case, it was the sub-
continuation of the voyage of the vessel; (3) the credit
charterer Portserv which requested for the
must have been extended to the vessel; (4) there must
delivery of the bunker fuels. The issuance of two
be necessity for the extension of the credit; and (5) the
checks amounting to US$300,000 in favor of
necessaries must be ordered by persons authorized to
petitioner Crescent prior to the delivery of the
contract on behalf of the vessel.[34] These do not avail
bunkers as security for the payment of the
in the instant case.
obligation weakens petitioner Crescents

First. It was not established that benefit was contention that credit was extended to the Vessel.

extended to the vessel. While this is presumed when

We also note that when copies of the
the master of the ship is the one who placed the order,
charter parties were submitted by respondents in
it is not disputed that in this case it was the sub-
the Court of Appeals, the time charters between
charterer Portserv which placed the orders to
respondent SCI and Halla and between Halla and
petitioner Crescent.[35] Hence, the presumption does
Transmar were shown to contain a clause which
not arise and it is incumbent upon petitioner Crescent
states that the Charterers shall provide and pay
to prove that benefit was extended to the vessel.
for all the fuel except as otherwise agreed. This
Petitioner did not.
militates against petitioner Crescents position

Second. Petitioner Crescent did not that Portserv is authorized by the shipowner to

show any proof that the marine products were contract for supplies upon the credit of the vessel.

necessary for the continuation of the vessel.

81
 Fourth. There was no proof of necessity A discussion on the principle of

of credit. A necessity of credit will be presumed forum non conveniens is unnecessary.

where it appears that the repairs and supplies

IN VIEW WHEREOF, the Decision of the
were necessary for the ship and that they were
Court of Appeals in CA-G.R. No. CV 54920, dated
ordered by the master. This presumption does
November 28, 2001, and its subsequent
not arise in this case since the fuels were not
Resolution of September 3, 2002 are AFFIRMED.
ordered by the master and there was no proof of
The instant petition for review on certiorari is
necessity for the supplies.
DENIED for lack of merit. Cost against petitioner.

Finally. The necessaries were not

SO ORDERED.
ordered by persons authorized to contract in

behalf of the vessel as provided under Section 22

of P.D. No. 1521 or the Ship Mortgage Decree of

1978 - the managing owner, the ships husband,

REYNATO S. PUNO

master or any person with whom the Associate Justice

management of the vessel at the port of supply is

WE CONCUR:
entrusted. Clearly, Portserv, a sub-charterer

under a time charter, is not someone to whom the

management of the vessel has been entrusted. A

MA. ALICIA AUSTRIA-MARTINEZ
time charter is a contract for the use of a vessel
Associate Justice

for a specified period of time or for the duration

of one or more specified voyages wherein the

owner of the time-chartered vessel retains

possession and control through the master and

crew who remain his employees.[37]Not enjoying

ROMEO J. CALLEJO, SR. DANTE O. TINGA
the presumption of authority, petitioner Crescent Associate Justice Associate Justice

should have proved that Portserv was authorized

by the shipowner to contract for supplies.

Petitioner failed.

82
(on leave)
MINITA V. CHICO-NAZARIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution, it is hereby certified that the conclusions
in the above Decision were reached in consultation
before the case was assigned to the writer of the
opinion of the Courts Division.
RE
YNATO
PUNO
Acting Chief Justice
* On leave.
[1] Penned by Associate Justice Juan Q. Enriquez, Jr.,
concurred in by Associate Justices Delilah
Vidallon-Magtolis and Candido V. Rivera;
Rollo, pp. 72-81.
[2] Penned by Associate Justice Juan Q. Enriquez, Jr.,
concurred in by Associate Justices Delilah
Vidallon-Magtolis and Josefina Guevara-
Salonga; id., pp. 83-85.
[3] Penned by Judge Leonardo B. Canares, Regional
Trial Court, Branch 10, Cebu City; id., pp. 87-
90.
[4] Hernandez, Eduardo F. and Peasales, Antero A.,
Philippine Admiralty and Maritime Law
(1987 ed.), pp. 9-10, citing New England
Mutual Marine Insurance Co. v. Dunkan 8 U.S.
(11 Wall) 1 (1870).
[5] G.R. No. L-2372, August 26, 1949.
[6] 2 C.J.S. Section 39, p. 100.
[7] Agbayani, Aguedo F., Commentaries and
Jurisprudence on the Commercial Laws of the
Philippines IV (1987), p.
178, citing McMicking v. Banco Espaol-
Filipino, 13 Phil. 429 (1909), Ivanvich v.
Odlin, 1 Phil. 284 (1902), and Heather v.
Steamer San Nicholas, 7 Phil. 532 (1907).
[8] Mcmicking v. Banco Espaol-Filipino, id.
[9] Ivancich vs. Odlin & Pacific Lumber Co., supra.
[10] Heather vs. Steamer San Nicholas, supra.
[11] Rollo, p. 315.
[12] Id., p. 469.
[13] 1st and 4th Whereas Clauses, P.D. No. 1521.
[14] See note 4, p. 133.
[15] The Woudrichem, 278 F. 568.
[16] 35 F. 907.
[17] 230 F. 717.
[18] 278 F. 568.
[19] 17 F.2d 308.
[20] Dougherty, William F., Multi-contact analysis for a
multinational industry: The United States
approach to choice of law analysis in the
enforcement of maritime liens, University of
S.
San Francisco Maritime Law Journal (2000-
2001), p. 89.
[21] 345 U.S. 571 (1953).
[22] 358 U.S. 354, 1959 AMC 832 (1959).
[23] See Dougherty, p. 82.
[24] 398 U.S. 306, 1970 AMC 994 (1970).
[25] 633 F.Supp. 74 (1985). A British corporation based
in London brought an in rem action against
the vessel M/V Ruth Venture to enforce a
maritime lien. A Liberian sub-charterer
contracted for the supply of bunkers in
London with Forsythe as its broker. The
bunkers were furnished to the vessel at
Richards Bay, South Africa but was not paid.
The vessel was arrested in Portland, Oregon.
In ruling that English law applies, it held
that the Lauritzen/Rhoditis factors should
be applied in a balancing analysis. [T]he
choice of law questions involving maritime
liens is to be resolved by weighing and
evaluating the points of contract between the
transaction and the sovereign legal systems
touched and affected by it The interests of
competing sovereigns may be taken into
account without rejecting altogether the
contacts the bar and the maritime industry
are accustomed to weigh in making the initial
determination of governing law. Because
English law disallows a lien for bunkers, the
court held there was no lien.
[26] 1983 WL 602 (D.Or.) (1983). This involves a suit by
a Singaporean corporation against a
Panamanian vessel that is owned by Costa
Ricans for supplies furnished in Singapore.
83
 The court, applying the Lauritzen factors, held
that U.S. law did not apply to determine
whether there exists a maritime lien. The case
was dismissed under the doctrine of
forum non conveniens. (See Tetley, William,
Maritime Liens, Mortgages and Conflict of
Laws, University of San Francisco Maritime
Law Journal [Fall, 1993], p. 17.)
[27] Gulf Trading and Transportation Co. v. The Vessel
Hoegh Shield, 658 F.2d 363 (1981).
[28] Id.
[29] 712 F.Supp 1542 (1988).
[30] 729 F.2d 971 (1984).
[31] Coquia, J. R. and Aguiling-Pangalangan, E., Conflict
of Laws (2000), p. 129.
[32] Id., p. 121, citing Beale, The Conflict of Laws,
Section 621.2 (1935).
[33] See note 31.
[34] Agbayani, p. 631.
[35] TSN, p. 6.
[36] Agbayani, p. 631, citing 70 Am Jur 2d, 479.
[37] Litonjua Shipping Inc. v. National Seamen Board,
G.R. No. 51910, August 10, 1989.
G.R. No. 156330, November 19, 2014
NEDLLOYD LIJNEN B.V. ROTTERDAM AND THE
EAST ASIATIC CO., LTD., Petitioners, v. GLOW LAKS
ENTERPRISES, LTD., Respondent.
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari1 filed
pursuant to Rule 45 of the Revised Rules of Court,
primarily assailing the 11 December 2002 Resolution
rendered by the Special Former Sixteenth Division of
the Court of Appeals in CA-G.R. CV No. 48277,2 the
decretal portion of which states:
WHEREFORE, the appeal is GRANTED and the April
29, 1994 Decision of the Regional Trial Court of
Manila, Branch 52 thereof in Civil Case No. 88-45595,
SET ASIDE. Nedlloyd Lijnen B.V. Rotterdam and The
East Asiatic Co., Ltd are ordered to pay Glow Laks
Enterprises, Ltd. the following:
1. The invoice value of the goods lost worth
$53,640.00, or its equivalent in Philippine
currency;
2. Attorney’s fees of P50,000.00; and
3. Costs.3
The Facts
Petitioner Nedlloyd Lijnen B.V. Rotterdam (Nedlloyd)
is a foreign corporation engaged in the business of
carrying goods by sea, whose vessels regularly call at
the port of Manila. It is doing business in the
Philippines thru its local ship agent, co-petitioner East
Asiatic Co., Ltd. (East Asiatic).
Respondent Glow Laks Enterprises, Ltd., is likewise a
foreign corporation organized and existing under the
laws of Hong Kong. It is not licensed to do, and it is not
doing business in, the Philippines.
On or about 14 September 1987, respondent loaded
on board M/S Scandutch at the Port of Manila a total
343 cartoons of garments, complete and in good order
for pre-carriage to the Port of Hong Kong. The goods
covered by Bills of Lading Nos. MHONX-2 and MHONX-
34 arrived in good condition in Hong Kong and were
transferred to M/S Amethyst for final carriage to
Colon, Free Zone, Panama. Both vessels, M/S
Scandutch and M/S Amethyst, are owned by Nedlloyd
represented in the Phlippines by its agent, East
Asiatic. The goods which were valued at US$53,640.00
was agreed to be released to the consignee, Pierre
Kasem, International, S.A., upon presentation of the
original copies of the covering bills of lading.5 Upon
arrival of the vessel at the Port of Colon on 23 October
1987, petitioners purportedly notified the consignee
of the arrival of the shipments, and its custody was
turned over to the National Ports Authority in
accordance with the laws, customs regulations and
practice of trade in Panama. By an unfortunate turn of
events, however, unauthorized persons managed to
forge the covering bills of lading and on the basis of
the falsified documents, the ports authority released
the goods.
On 16 July 1988, respondent filed a formal claim with
Nedlloyd for the recovery of the amount of
US$53,640.00 representing the invoice value of the
shipment but to no avail.6 Claiming that petitioners
are liable for the misdelivery of the goods, respondent
initiated Civil Case No. 88-45595 before the Regional
Trial Court (RTC) of Manila, Branch 52, seeking for the
recovery of the amount of US$53,640.00, including the
legal interest from the date of the first demand.7
In disclaiming liability for the misdelivery of the
shipments, petitioners asserted in their Answer8 that
they were never remiss in their obligation as a
common carrier and the goods were discharged in
good order and condition into the custody of the
National Ports Authority of Panama in accordance
with the Panamanian law. They averred that they
cannot be faulted for the release of the goods to
unauthorized persons, their extraordinary
responsibility as a common carrier having ceased at
the time the possession of the goods were turned over
to the possession of the port authorities.
After the Pre-Trial Conference, trial on the merits
ensued. Both parties offered testimonial and
documentary evidence to support their respective
causes. On 29 April 2004, the RTC rendered a
Decision9 ordering the dismissal of the complaint but
granted petitioners’ counterclaims. In effect,
respondent was directed to pay petitioners the
amount of P120,000.00 as indemnification for the
litigation expenses incurred by the latter. In releasing
the common carrier from liability for the misdelivery
of the goods, the RTC ruled that Panama law was duly
84
proven during the trial and pursuant to the said
statute, carriers of goods destined to any Panama port
of entry have to discharge their loads into the custody
of Panama Ports Authority to make effective
government collection of port dues, customs duties
and taxes. The subsequent withdrawal effected by
unauthorized persons on the strength of falsified bills
of lading does not constitute misdelivery arising from
the fault of the common carrier. The decretal part of
the RTC Decision reads:
WHEREFORE, judgment is rendered for [petitioners]
and against [Respondent], ordering the dismissal of
the complaint and ordering the latter to pay
[petitioners] the amount of ONE HUNDRED TWENTY
THOUSAND PESOS (P120,000.00) on their
counterclaims.
Cost against [Respondent].10
On appeal, the Court of Appeals reversed the findings
of the RTC and held that foreign laws were not proven
in the manner provided by Section 24, Rule 132 of the
Revised Rules of Court, and therefore, it cannot be
given full faith and credit.11 For failure to prove the
foreign law and custom, it is presumed that foreign
laws are the same as our local or domestic or internal
law under the doctrine of processual
presumption. Under the New Civil Code, the discharge
of the goods into the custody of the ports authority
therefore does not relieve the common carrier from
liability because the extraordinary responsibility of
the common carriers lasts until actual or constructive
delivery of the cargoes to the consignee or to the
person who has the right to receive them. Absent any
proof that the notify party or the consignee was
informed of the arrival of the goods, the appellate
court held that the extraordinary responsibility of
common carriers remains. Accordingly, the Court of
Appeals directed petitioners to pay respondent the
value of the misdelivered goods in the amount of
US$53,640.00.
The Issues
Dissatisfied with the foregoing disquisition,
petitioners impugned the adverse Court of Appeals
Decision before the Court on the following grounds:
I.
THERE IS ABSOLUTELY NO NEED TO PROVE
PANAMANIAN LAWS BECAUSE THEY HAD BEEN
JUDICIALLY ADMITTED. AN ADMISSION BY A PARTY
IN THE COURSE OF THE PROCEEDINGS DOES NOT
REQUIRE PROOF.
II.
BY PRESENTING AS EVIDENCE THE [GACETA]
OFFICIAL OF REPUBLICA DE PANAMA NO. 17.596
WHERE THE APPLICABLE PANAMANIAN LAWS WERE
OFFICIALLY PUBLISHED, AND THE TESTIMONY OF
EXPERT WITNESSES, PETITIONERS WERE ABLE TO
PROVE THE LAWS OF PANAMA.
III.
IF WE HAVE TO CONCEDE TO THE COURT OF
APPEALS’ FINDING THAT THERE WAS FAILURE OF
PROOF, THE LEGAL QUESTION PRESENTED TO THE
HONORABLE COURT SHOULD BE RESOLVED
FAVORABLY BECAUSE THE CARRIER DISCHARGED
ITS DUTY WHETHER UNDER THE PANAMANIAN LAW
OR UNDER PHILIPPINE LAW.12
The Court’s Ruling
We find the petition bereft of merit.
It is well settled that foreign laws do not prove
themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any
other fact, they must be alleged and proved.13 To
prove a foreign law, the party invoking it must present
a copy thereof and comply with Sections 24 and 25 of
Rule 132 of the Revised Rules of Court14 which read:
SEC. 24. Proof of official record. — The record of public
documents referred to in paragraph (a) of Section 19,
when admissible for any purpose, may be evidenced
by an official publication thereof or by a copy attested
by the officer having the legal custody of the record, or
by his deputy, and accompanied, if the record is not
kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the
record is kept is in a foreign country, the
certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice-
consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the
foreign country in which the record is kept, and
authenticated by the seal of his office.
SEC. 25. What attestation of copy must state. —
Whenever a copy of a document or record is attested
for the purpose of the evidence, the attestation must
state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may
be. The attestation must be under the official seal of
the attesting officer, if there be any, or if he be the
clerk of a court having a seal, under the seal of such
court.
For a copy of a foreign public document to be
admissible, the following requisites are mandatory:
(1) it must be attested by the officer having legal
custody of the records or by his deputy; and (2) it
must be accompanied by a certificate by a secretary of
the embassy or legation, consul general, consul, vice-
consular or consular agent or foreign service officer,
and with the seal of his office.15 Such official
publication or copy must be accompanied, if the
record is not kept in the Philippines, with a certificate
that the attesting officer has the legal custody
thereof.16 The certificate may be issued by any of the
authorized Philippine embassy or consular officials
stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office. 17 The
attestation must state, in substance, that the copy is a
correct copy of the original, or a specific part thereof,
as the case may be, and must be under the official seal
of the attesting officer.18
Contrary to the contention of the petitioners, the
Panamanian laws, particularly Law 42 and its
Implementing Order No. 7, were not duly proven in
accordance with Rules of Evidence and as such, it
cannot govern the rights and obligations of the parties
in the case at bar. While a photocopy of the Gaceta
85
Official of the Republica de Panama No. 17.596, the
Spanish text of Law 42 which is the foreign statute
relied upon by the court a quo to relieve the
common carrier from liability, was presented as
evidence during the trial of the case below, the
same however was not accompanied by the
required attestation and certification.
It is explicitly required by Section 24, Rule 132 of the
Revised Rules of Court that a copy of the statute must
be accompanied by a certificate of the officer who has
legal custody of the records and a certificate made by
the secretary of the embassy or legation, consul
general, consul, vice-consular or by any officer in the
foreign service of the Philippines stationed in the
foreign country, and authenticated by the seal of his
office. The latter requirement is not merely a
technicality but is intended to justify the giving of full
faith and credit to the genuineness of the document in
a foreign country.19 Certainly, the deposition of Mr.
Enrique Cajigas, a maritime law practitioner in the
Republic of Panama, before the Philippine Consulate in
Panama, is not the certificate contemplated by law. At
best, the deposition can be considered as an opinion of
an expert witness who possess the required special
knowledge on the Panamanian laws but could not be
recognized as proof of a foreign law, the deponent not
being the custodian of the statute who can guarantee
the genuineness of the document from a foreign
country. To admit the deposition as proof of a foreign
law is, likewise, a disavowal of the rationale of Section
24, Rule 132 of the Revised Rules of Court, which is to
ensure authenticity of a foreign law and its existence
so as to justify its import and legal consequence on the
event or transaction in issue.
The above rule, however, admits exceptions, and the
Court in certain cases recognized that Section 25, Rule
132 of the Revised Rules of Court does not exclude the
presentation of other competent evidence to prove the
existence of foreign law. In Willamete Iron and Steel
Works v. Muzzal20 for instance, we allowed the foreign
law to be established on the basis of the testimony in
open court during the trial in the Philippines of an
attorney-at-law in San Francisco, California, who
quoted the particular foreign law sought to be
established.21 The ruling is peculiar to the
facts. Petitioners cannot invoke the Willameteruling to
secure affirmative relief since their so called expert
witness never appeared during the trial below and his
deposition, that was supposed to establish the
existence of the foreign law, was obtained ex-parte.
It is worth reiterating at this point that under the rules
of private international law, a foreign law must be
properly pleaded and proved as a fact. In the absence
of pleading and proof, the laws of the foreign country
or state will be presumed to be the same as our local
or domestic law. This is known as processual
presumption.22 While the foreign law was properly
pleaded in the case at bar, it was, however, proven not
in the manner provided by Section 24, Rule 132 of the
Revised Rules of Court. The decision of the RTC, which
proceeds from a disregard of specific rules cannot be
recognized.
Having settled the issue on the applicable Rule, we
now resolve the issue of whether or not petitioners
are liable for the misdelivery of goods under
Philippine laws.
Under the New Civil Code, common carriers, from the
nature of their business and for reasons of public
policy, are bound to observe extraordinary
diligence in the vigilance over goods, according to the
circumstances of each case.23 Common carriers are
responsible for loss, destruction or deterioration of
the goods unless the same is due to flood, storm,
earthquake or other natural disaster or
calamity.24 Extraordinary diligence is that extreme
care and caution which persons of unusual
prudence and circumspection use for securing or
preserving their own property or rights.25 This
expecting standard imposed on common carriers in
contract of carrier of goods is intended to tilt the
scales in favor of the shipper who is at the mercy of
the common carrier once the goods have been lodged
for the shipment.26 Hence, in case of loss of goods in
transit, the common carrier is presumed under the law
to have been in fault or negligent. 27
While petitioners concede that, as a common carrier,
they are bound to observe extraordinary diligence in
the care and custody of the goods in their possession,
they insist that they cannot be held liable for the loss
of the shipments, their extraordinary responsibility
having ceased at the time the goods were discharged
into the custody of the customs arrastre operator, who
in turn took complete responsibility over the care,
storage and delivery of the cargoes.28
In contrast, respondent, submits that the fact that the
shipments were not delivered to the consignee as
stated in the bill of lading or to the party designated or
named by the consignee, constitutes misdelivery
thereof, and under the law it is presumed that the
common carrier is at fault or negligent if the goods
they transported, as in this case, fell into the hands of
persons who have no right to receive them.
We sustain the position of the respondent.
Article 1736 and Article 1738 are the provisions in the
New Civil Code which define the period when the
common carrier is required to exercise diligence lasts,
viz:
Article 1736. The extraordinary responsibility of the
common carrier lasts from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the
same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a
right to receive them, without prejudice to the
provisions of article 1738.
Article 1738. The extraordinary liability of the
common carrier continues to be operative even during
the time the goods are stored in a warehouse of the
carrier at the place of destination, until the consignee
has been advised of the arrival of the goods and has
had reasonable opportunity thereafter to remove
them or otherwise dispose of them.
Explicit is the rule under Article 1736 of the Civil Code
that the extraordinary responsibility of the common
carrier begins from the time the goods are delivered to
the carrier.29 This responsibility remains in full force
and effect even when they are temporarily unloaded
or stored in transit, unless the shipper or owner
86
exercises the right of stoppage in transitu, and
terminates only after the lapse of a reasonable time for
the acceptance, of the goods by the consignee or such
other person entitled to receive them.30
It was further provided in the same statute that the
carrier may be relieved from the responsibility for loss
or damage to the goods upon actual or constructive
delivery of the same by the carrier to the consignee or
to the person who has the right to receive them.31 In
sales, actual delivery has been defined as the ceding of
the corporeal possession by the seller, and the actual
apprehension of the corporeal possession by the buyer
or by some person authorized by him to receive the
goods as his representative for the purpose of custody
or disposal.32 By the same token, there is actual
delivery in contracts for the transport of goods
when possession has been turned over to the
consignee or to his duly authorized agent and a
reasonable time is given him to remove the
goods.33
In this case, there is no dispute that the custody of the
goods was never turned over to the consignee or his
agents but was lost into the hands of unauthorized
persons who secured possession thereof on the
strength of falsified documents. The loss or the
misdelivery of the goods in the instant case gave rise
to the presumption that the common carrier is at fault
or negligent.
A common carrier is presumed to have been negligent
if it fails to prove that it exercised extraordinary
vigilance over the goods it transported.34 When the
goods shipped are either lost or arrived in
damaged condition, a presumption arises against
the carrier of its failure to observe that diligence,
and there need not be an express finding of
negligence to hold it liable.35 To overcome the
presumption of negligence, the common carrier
must establish by adequate proof that it exercised
extraordinary diligence over the goods.36 It must
do more than merely show that some other party
could be responsible for the damage.37
In the present case, petitioners failed to prove that
they did exercise the degree of diligence required by
law over the goods they transported. Indeed, aside
from their persistent disavowal of liability by
conveniently posing an excuse that their extraordinary
responsibility is terminated upon release of the goods
to the Panamanian Ports Authority, petitioners failed
to adduce sufficient evidence they exercised
extraordinary care to prevent unauthorized
withdrawal of the shipments. Nothing in the New Civil
Code, however, suggests, even remotely, that the
common carriers’ responsibility over the goods ceased
upon delivery thereof to the custom authorities. To
the mind of this Court, the contract of carriage remains
in full force and effect even after the delivery of the
goods to the port authorities; the only delivery that
releases it from their obligation to observe
extraordinary care is the delivery to the consignee or
his agents. Even more telling of petitioners’
continuing liability for the goods transported to the
fact that the original bills of lading up to this time,
remains in the possession of the notify party or
consignee. Explicit on this point is the provision of
Article 353 of the Code of Commerce which provides:
Article 353. The legal evidence of the contract
between the shipper and the carrier shall be the bills
of lading, by the contents of which the disputes which
may arise regarding their execution and performance
shall be decided, no exceptions being admissible other
than those of falsity and material error in the drafting.
After the contract has been complied with, the bill
of lading which the carrier has issued shall be
returned to him, and by virtue of the exchange of
this title with the thing transported, the respective
obligations and actions shall be considered
cancelled, unless in the same act the claim which
the parties may wish to reserve be reduced to
writing, with the exception of that provided for in
Article 366.
In case the consignee, upon receiving the goods,
cannot return the bill of lading subscribed by the
carrier, because of its loss or of any other cause, he
must give the latter a receipt for the goods delivered,
this receipt producing the same effects as the return of
the bill of lading.
While surrender of the original bill of lading is not a
condition precedent for the common carrier to be
discharged from its contractual obligation, there must
be, at the very least, an acknowledgement of the
delivery by signing the delivery receipt, if surrender of
the original of the bill of lading is not possible.38 There
was neither surrender of the original copies of the bills
of lading nor was there acknowledgment of the
delivery in the present case. This leads to the
conclusion that the contract of carriage still subsists
and petitioners could be held liable for the breach
thereof.
Petitioners could have offered evidence before the
trial court to show that they exercised the highest
degree of care and caution even after the goods was
turned over to the custom authorities, by promptly
notifying the consignee of its arrival at the Port of
Cristobal in order to afford them ample opportunity to
remove the cargoes from the port of discharge. We
have scoured the records and found that neither the
consignee nor the notify party was informed by the
petitioners of the arrival of the goods, a crucial fact
indicative of petitioners’ failure to observe
extraordinary diligence in handling the goods
entrusted to their custody for transport. They could
have presented proof to show that they exercised
extraordinary care but they chose in vain, full reliance
to their cause on applicability of Panamanian law to
local jurisdiction.
It is for this reason that we find petitioners liable for
the misdelivery of the goods. It is evident from the
review of the records and by the evidence adduced by
the respondent that petitioners failed to rebut
the prima facie presumption of negligence. We find no
compelling reason to depart from the ruling of the
Court of Appeals that under the contract of carriage,
petitioners are liable for the value of the misdelivered
goods.
WHEREFORE, premises considered, the petition is
hereby DENIED. The assailed Resolution of the Court
of Appeals is hereby AFFIRMED.
SO ORDERED.
87
Sereno, C.J., (Chairperson), Velasco, Jr.,* Leonardo De- 26 Id.
Castro, and Perlas-Bernabe, JJ., concur.
27 Id.
Endnotes:
28 Petition for Review on Certiorari. Rollo, pp. 54-56.

* Per Special Order No. 1870 dated 4 November 2014. Saludo, Jr., v. Court of Appeals, G.R. No, 95536, 23
29

March 1992, 207 SCRA 498, 511.

1Rollo, pp. 23-58. 30 Id.
2Penned by Associate Justice Mariano C. Del Castillo 31Samar
(now a member of this Court) with Associate Justices Mining Company, Inc. v. Nordeutscher Lloyd
Oswaldo D. Agcaoili and Bernardo P. Abesamis, and C.F. Sharp and Company, Inc., 217 Phil. 497, 506
concurring. Id. at 118-119. (1984).

3 Id. at 119.
32 Id.

4 Folder of Exhibits, pp. 104-105.

33 Id.

34RegionalContainer Lines (RCL) of Singapore v. The

5 Id. at 108.
Netherlands Insurance Co., (Philippines), Inc., G. R. No.
6 Id. at 119-121. 168151, 4 September 2009, 598 SCRA 304, 313.

7 Complaint. Records, Vol. I, pp. 1-4.

35 Id.

8 Answer. Id. at 10-15.

36 Id.

9 RTC Decision. Records, Vol. II, pp. 528-536.

37 Id.

38National Trucking and Forwarding Corp. v. Lorenzo

10 Id. at 536.
Shipping Corporation, supra note 25 at 157.
11 CA Decision. Rollo, pp. 10-17.

12 Id. at 32-46.
G.R. No. 178551 October 11, 2010
13Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396
Phil. 383, 392 (2000). ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL
and MINISTRY OF PUBLIC HEALTH-
14ATCI Overseas Corporation v. Echin, G.R. No. 178551, KUWAITPetitioners,
11 October 2010, 632 SCRA 528, 535. vs.
MA. JOSEFA ECHIN, Respondent.
15Wildvalley Shipping Co., Ltd., v. Court of
Appeals, supra note 13 at 395. DECISION

16Manufacturers Hanover Trust Co. v. Guerrero, 445 CARPIO MORALES, J.:

Phil. 770, 778 (2003).
Josefina Echin (respondent) was hired by petitioner
17 Id. ATCI Overseas Corporation in behalf of its principal-
co-petitioner, the Ministry of Public Health of Kuwait
18 Id. (the Ministry), for the position of medical technologist
19Wildvalley
under a two-year contract, denominated as a
Shipping Co., Ltd., v. Court of Memorandum of Agreement (MOA), with a monthly
Appeals, supra note 13 at 395. salary of US$1,200.00.
20 61 Phil. 471 (1935).
Under the MOA,1 all newly-hired employees undergo a
21Manufacturer probationary period of one (1) year and are covered
Hanover Trust Co. v. Guerrero, supra
by Kuwait’s Civil Service Board Employment Contract
note 16 at 779 citing Willamete Iron and Steel Works v.
No. 2.
Muzzal, id.

22Wildvalley Shipping Co., Ltd., v. Court of Respondent was deployed on February 17, 2000 but
Appeals, supra note 13 at 396. was terminated from employment on February 11,
2001, she not having allegedly passed the
23 New Civil Code, Article 1733. probationary period.

24 New Civil Code, Article 1734. As the Ministry denied respondent’s request for
reconsideration, she returned to the Philippines on
25NationalTrucking and Forwarding Corp. v. Lorenzo March 17, 2001, shouldering her own air fare.
Shipping Corporation, 491 Phil. 151, 156 (2005).

88
On July 27, 2001, respondent filed with the National
Labor Relations Commission (NLRC) a complaint2 for
illegal dismissal against petitioner ATCI as the local
recruitment agency, represented by petitioner, Amalia
Ikdal (Ikdal), and the Ministry, as the foreign principal.
By Decision3 of November 29, 2002, the Labor Arbiter,
finding that petitioners neither showed that there was
just cause to warrant respondent’s dismissal nor that
she failed to qualify as a regular employee, held that
respondent was illegally dismissed and accordingly
ordered petitioners to pay her US$3,600.00,
representing her salary for the three months
unexpired portion of her contract.
On appeal of petitioners ATCI and Ikdal, the NLRC
affirmed the Labor Arbiter’s decision by Resolution4 of
January 26, 2004. Petitioners’ motion for
reconsideration having been denied by Resolution5 of
April 22, 2004, they appealed to the Court of Appeals,
contending that their principal, the Ministry, being a
foreign government agency, is immune from suit and,
as such, the immunity extended to them; and that
respondent was validly dismissed for her failure to
meet the performance rating within the one-year
period as required under Kuwait’s Civil Service Laws.
Petitioners further contended that Ikdal should not be
liable as an officer of petitioner ATCI.
By Decision6 of March 30, 2007, the appellate court
affirmed the NLRC Resolution.
In brushing aside petitioners’ contention that they
only acted as agent of the Ministry and that they
cannot be held jointly and solidarily liable with it, the
appellate court noted that under the law, a private
employment agency shall assume all responsibilities
for the implementation of the contract of employment
of an overseas worker, hence, it can be sued jointly
and severally with the foreign principal for any
violation of the recruitment agreement or contract of
employment.
As to Ikdal’s liability, the appellate court held that
under Sec. 10 of Republic Act No. 8042, the "Migrant
and Overseas Filipinos’ Act of 1995," corporate
officers, directors and partners of a recruitment
agency may themselves be jointly and solidarily liable
with the recruitment agency for money claims and
damages awarded to overseas workers.
Petitioners’ motion for reconsideration having been
denied by the appellate court by Resolution7 of June
27, 2007, the present petition for review on certiorari
was filed.
Petitioners maintain that they should not be held
liable because respondent’s employment contract
specifically stipulates that her employment shall be
governed by the Civil Service Law and Regulations of
Kuwait. They thus conclude that it was patent error for
the labor tribunals and the appellate court to apply the
Labor Code provisions governing probationary
employment in deciding the present case.
Further, petitioners argue that even the Philippine
Overseas Employment Act (POEA) Rules relative to
master employment contracts (Part III, Sec. 2 of the
POEA Rules and Regulations) accord respect to the
"customs, practices, company policies and labor laws
and legislation of the host country."
Finally, petitioners posit that assuming arguendo that
Philippine labor laws are applicable, given that the
foreign principal is a government agency which is
immune from suit, as in fact it did not sign any
document agreeing to be held jointly and solidarily
liable, petitioner ATCI cannot likewise be held liable,
more so since the Ministry’s liability had not been
judicially determined as jurisdiction was not acquired
over it.
The petition fails.
Petitioner ATCI, as a private recruitment agency,
cannot evade responsibility for the money claims of
Overseas Filipino workers (OFWs) which it deploys
abroad by the mere expediency of claiming that its
foreign principal is a government agency clothed with
immunity from suit, or that such foreign principal’s
liability must first be established before it, as agent,
can be held jointly and solidarily liable.
In providing for the joint and solidary liability of
private recruitment agencies with their foreign
principals, Republic Act No. 8042 precisely affords the
OFWs with a recourse and assures them of immediate
and sufficient payment of what is due them. Skippers
United Pacific v. Maguad8 explains:
. . . [T]he obligations covenanted in the recruitment
agreement entered into by and between the local
agent and its foreign principal are not coterminous
with the term of such agreement so that if either or
both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted
employees under the agreement do not at all end, but
the same extends up to and until the expiration of the
employment contracts of the employees recruited and
employed pursuant to the said recruitment
agreement. Otherwise, this will render nugatory
the very purpose for which the law governing the
employment of workers for foreign jobs abroad
was enacted. (emphasis supplied)
The imposition of joint and solidary liability is in line
with the policy of the state to protect and alleviate the
plight of the working class.9 Verily, to allow petitioners
to simply invoke the immunity from suit of its foreign
principal or to wait for the judicial determination of
the foreign principal’s liability before petitioner can be
held liable renders the law on joint and solidary
liability inutile.
As to petitioners’ contentions that Philippine labor
laws on probationary employment are not applicable
since it was expressly provided in respondent’s
employment contract, which she voluntarily entered
into, that the terms of her engagement shall be
governed by prevailing Kuwaiti Civil Service Laws and
Regulations as in fact POEA Rules accord respect to
such rules, customs and practices of the host country,
the same was not substantiated.
Indeed, a contract freely entered into is considered the
law between the parties who can establish
stipulations, clauses, terms and conditions as they may
deem convenient, including the laws which they wish
89
to govern their respective obligations, as long as they
are not contrary to law, morals, good customs, public
order or public policy.
It is hornbook principle, however, that the party
invoking the application of a foreign law has the
burden of proving the law, under the doctrine of
processual presumption which, in this case,
petitioners failed to discharge. The Court’s ruling in
EDI-Staffbuilders Int’l., v. NLRC10 illuminates:
In the present case, the employment contract signed
by Gran specifically states that Saudi Labor Laws will
govern matters not provided for in the contract (e.g.
specific causes for termination, termination
procedures, etc.). Being the law intended by the
parties (lex loci intentiones) to apply to the contract,
Saudi Labor Laws should govern all matters relating to
the termination of the employment of Gran.
In international law, the party who wants to have a
foreign law applied to a dispute or case has the burden
of proving the foreign law. The foreign law is treated
as a question of fact to be properly pleaded and
proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to
know only domestic or forum law.
Unfortunately for petitioner, it did not prove the
pertinent Saudi laws on the matter; thus, the
International Law doctrine of presumed-identity
approach or processual presumption comes into play.
Where a foreign law is not pleaded or, even if pleaded,
is not proved, the presumption is that foreign law is
the same as ours. Thus, we apply Philippine labor laws
in determining the issues presented before us.
(emphasis and underscoring supplied)
The Philippines does not take judicial notice of foreign
laws, hence, they must not only be alleged; they must
be proven. To prove a foreign law, the party invoking
it must present a copy thereof and comply with
Sections 24 and 25 of Rule 132 of the Revised Rules of
Court which reads:
SEC. 24. Proof of official record. — The record of public
documents referred to in paragraph (a) of Section 19,
when admissible for any purpose, may be evidenced
by an official publication thereof or by a copy attested
by the officer having the legal custody of the record, or
by his deputy, and accompanied, if the record is not
kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the record
is kept is in a foreign country, the certificate may be
made by a secretary of the embassy or legation, consul
general, consul, vice consul, or consular agent or by
any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office.
(emphasis supplied)
SEC. 25. What attestation of copy must state. —
Whenever a copy of a document or record is attested
for the purpose of the evidence, the attestation must
state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may
be. The attestation must be under the official seal of
the attesting officer, if there be any, or if he be the
clerk of a court having a seal, under the seal of such
court.
To prove the Kuwaiti law, petitioners submitted the
following: MOA between respondent and the Ministry,
as represented by ATCI, which provides that the
employee is subject to a probationary period of one
(1) year and that the host country’s Civil Service Laws
and Regulations apply; a translated copy11 (Arabic to
English) of the termination letter to respondent
stating that she did not pass the probation terms,
without specifying the grounds therefor, and a
translated copy of the certificate of termination,12 both
of which documents were certified by Mr. Mustapha
Alawi, Head of the Department of Foreign Affairs-
Office of Consular Affairs Inslamic Certification and
Translation Unit; and respondent’s letter13 of
reconsideration to the Ministry, wherein she noted
that in her first eight (8) months of employment, she
was given a rating of "Excellent" albeit it changed due
to changes in her shift of work schedule.
These documents, whether taken singly or as a whole,
do not sufficiently prove that respondent was validly
terminated as a probationary employee under Kuwaiti
civil service laws. Instead of submitting a copy of
the pertinent Kuwaiti labor laws duly
authenticated and translated by Embassy officials
thereat, as required under the Rules, what
petitioners submitted were mere certifications
attesting only to the correctness of the translations
of the MOA and the termination letter which does
not prove at all that Kuwaiti civil service laws
differ from Philippine laws and that under such
Kuwaiti laws, respondent was validly
terminated. Thus the subject certifications read:
xxxx
This is to certify that the herein attached translation/s
from Arabic to English/Tagalog and or vice versa
was/were presented to this Office for review and
certification and the same was/were found to be in
order. This Office, however, assumes no
responsibility as to the contents of the
document/s.
This certification is being issued upon request of the
interested party for whatever legal purpose it may
serve. (emphasis supplied)1avvphi1
Respecting Ikdal’s joint and solidary liability as a
corporate officer, the same is in order too following
the express provision of R.A. 8042 on money claims,
viz:
SEC. 10. Money Claims.—Notwithstanding any
provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the
filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any
law or contract involving Filipino workers for
overseas deployment including claims for actual
moral, exemplary and other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims
90
under this section shall be joint and several. This
provision shall be incorporated in the contract for
overseas employment and shall be a condition
precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as
provided by law, shall be answerable for all money
claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be
jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages.
(emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED.
SO ORDERED.
4Id. at 26-29. Penned by Commissioner (now
CA Associate Justice) Angelita A. Gacutan and
concurred in by Presiding Commissioner Raul
T. Aquino and Commissioner Victoriano R.
Calaycay.
5 Id. at 30-31.
6Id. at 95-104. Penned by Associate Justice
Fernanda Lampas Peralta and concurred in by
Associate Justices Edgardo P. Cruz and
Normandie B. Pizarro.
7 Id. at 137. Ibid.
8G.R. No. 166363, August 15, 2006, 498 SCRA
639, 645 citing Catan v. NLRC, 160 SCRA 691.

CONCHITA CARPIO MORALES 9Datuman v. First Cosmopolitan Manpower

Associate Justice And Promotion Services, Inc., G.R. No. 156029,
November 14, 2008, 571 SCRA 41, 42.
WE CONCUR:
10G.R. No. 145587, October 26, 2007, 537
ARTURO D. BRION SCRA 409, 430.
Associate Justice
11 Annex ‘D" of the petition, rollo, pp. 61-63.
MARTIN S.
LUCAS P. BERSAMIN
VILLARAMA, JR. 12 Annex "D-1" of the petition, id. at 64-66
Associate Justice
Associate Justice
13 Annex "E" of the petition, id. at 67.
MARIA LOURDES P. A. SERENO
Associate Justice
The Lawphil Project - Arellano Law Foundation
ATTESTATION

I attest that the conclusions in the above Decision had

been reached in consultation before the case was
G.R. No. 207342
assigned to the writer of the opinion of the Court’s
Division.
GOVERNMENT OF HONGKONG SPECIAL
ADMINISTRATIVE REGION, represented by the
CONCHITA CARPIO MORALES
PHILIPPINE DEPARTMENT OF JUSTICE, Petitioner
Associate Justice
vs.
Chairperson
JUAN ANTONIO MUÑOZ, Respondent
CERTIFICATION
RESOLUTION
Pursuant to Section 13, Article VIII of the Constitution,
BERSAMIN, J.:
and the Division Chairperson’s Attestation, I certify
that the conclusions in the above decision had been
reached in consultation before the case was assigned Under the rule of specialty in international law, a
to the writer of the opinion of the Court’s Division. Requested State shall surrender to a Requesting State
a person to be tried only for a criminal offense
specified in their treaty of extradition. Conformably
RENATO C. CORONA
with the dual criminality ruleembodied in the
Chief Justice
extradition treaty between the Philippines and the
Hong Kong Special Administrative Region (HKSAR),
however, the Philippines as the Requested State is not
bound to extradite the respondent to the jurisdiction
of the HKSAR as the Requesting State for the offense
Footnotes of accepting an advantage as an agentconsidering that
the extradition treaty is forthright in providing that
1 Annex "C" of the petition, rollo, pp. 59-60. surrender shall only be granted for an offense coming
within the descriptions of offenses in its Article 2
2 CA rollo, p. 197. insofar as the offenses are punishable by
imprisonment or other form of detention for more
than one year, or by a more severe penalty according
3 Id at. 32-36. Penned by Labor Arbiter Fatima
to the laws of both parties.
Jambaro Franco.

91
For consideration and resolution is the petitioner's
motion for reconsideration1 to seek the review and
reversal of the decision promulgated on August 16,
2016,2 whereby the Court affirmed the amended
decision of the Court of Appeals (CA) promulgated on
March 1, 2013 in CA-G.R. CV No. 88610, and
accordingly denied the petition for review
on certiorari.3We thereby held that respondent Juan
Antonio Muñoz could only be extradited to and tried
by the HK.SAR for seven (7) counts of conspiracy to
defraud, but not for the other crime of accepting an
advantage as an agent. This, because conspiracy to
defraud was a public sector offense, but accepting an
advantage as an agentdealt with private sector
bribery; hence, the dual criminality rule embodied in
the treaty of extradition has not been met.
The Court DENIES the petitioner's motion for
reconsideration for its lack of merit considering that
the basic issues being thereby raised were already
passed upon and no substantial arguments were
presented to warrant the reversal of the decision
promulgated on August 16, 2016.
Article 2 of the RP-Hong Kong treaty provides that
surrender of the extraditee by the Requested State to
the Requesting State shall only be for an offense
coming within any of the descriptions of the offenses
therein listed insofar as the offenses are punishable by
imprisonment or other form of detention for more
than one year, or by a more severe penalty according
to the laws of both parties. The provision expresses
the dual criminality rule. The determination of
whether or not the offense concerned complied with
the dual criminality rule rests on the Philippines as the
requested party. Hence, the Philippines must carefully
ascertain the exact nature of the offenses involved in
the request, and thereby establish that the surrender
of Muñoz for trial in the HKSAR will be proper. On its
part, the HKSAR as the requesting party should prove
that the offense is covered by the RP-Hong Kong
Treaty, and punishable in our jurisdiction.
A perusal of the motion for reconsideration shows that
the petitioner has lifted from the dissenting opinion
the arguments it now advances to support its
insistence that Munoz must also be extradited for the
crime of accepting an advantage as an agent. In the last
paragraph of the motion for reconsideration, the
petitioner cites the ruling supposedly handed down by
the Court of Final Appeal of the HKSAR in the case of B
v. The Commissioner of the Independent Commission
Against Corruption to the effect that the term agent in
Section 9 of the HK.SAR' s Prevention of Bribery
Ordinance (POBO) also covered public servants in
another jurisdiction.4 On the basis of such supposed
ruling, the petitioner prays that the exclusion of the
crime of accepting an advantage as an agent be
reversed; and that the Court should hold Muñoz to be
extraditable also for such crime.
The petitioner's prayer cannot be granted. To grant it
would be to take judicial notice of the ruling in B v. The
Commissioner of the Independent Commission Against
Corruption. Like all other courts in this jurisdiction,
however, the Court is not at liberty to take judicial
notice of the ruling without contravening our own
rules on evidence under which foreign judgments and
laws are not considered as matters of a public or
notorious nature that proved themselves.
Verily, foreign judgments and laws, if relevant, have to
be duly alleged and competently proved like any other
disputed fact. Noveras v. Noveras5explains why:
x x x Justice Herrera explained that, as a rule, "no
sovereign is bound to give effect within its dominion
to a judgment rendered by a tribunal of another
country." This means that the foreign judgment and its
authenticity must be proven as facts under our rules
on evidence, together with the alien's applicable
national law to show the effect of the judgment on the
alien himself or herself. The recognition may be made
in an action instituted specifically for the purpose or in
another action where a party invokes the foreign
decree as an integral aspect of his claim or defense.
xxxx
Under Section 24 of Rule 132, the record of public
documents of a sovereign authority or tribunal may be
proved by: (1) an official publication thereof or (2) a
copy attested by the officer having the legal custody
thereof. Such official publication or copy must be
accompanied, if the record is not kept in the
Philippines, with a certificate that the attesting officer
has the legal custody thereof. The certificate may be
issued by any of the authorized Philippine embassy or
consular officials stationed in the foreign country in
which the record is kept, and authenticated by the seal
of his office. The attestation must state, in substance,
that the copy is a correct copy of the original, or a
specific part thereof, as the case may be, and must be
under the official seal of the attesting officer.
Section 25 of the same Rule states that whenever a
copy of a document or record is attested for the
purpose of evidence, the attestation must state, in
substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may
be.1âwphi1 The attestation must be under the official
seal of the attesting officer, if there be any, or if he be
the clerk of a court having a seal, under the seal of
such court.6
Worthy to remind in this regard is that the power to
take judicial notice is to be exercised by the courts of
the Philippines with caution, and every reasonable
doubt should be resolved in the negative.7
Furthermore, the courts in the Philippines lacked
expertise on the laws of the HK.SAR. This precisely
necessitated the hearing before the trial court to
receive the opinion testimonies of qualified experts on
the laws of the HK.SAR. The experts were Clive
Stephen Grossman, the Senior Counsel of the Hong
Kong Bar Association, and Ian Charles Mc Walters, the
Senior Assistant Director of Public Prosecutions in the
Department of Justice of the HK.SAR. Not surprisingly,
said legal experts shared the opinion that the offense
defined in Section 9 of the POBO was a private sector
offense. The CA thus decided against the petitioner's
position. To extradite Muñoz also for the crime
for accepting an advantage as an agent would be
devoid of justification if the Philippines did not have
an equivalent crime of accepting an advantage as an
agent.
92
At the time when the ruling in B v. The Commissioner of
the Independent Commission Against Corruption was S. CAGUIOA MARTIRES
supposedly handed down on January 28, 2010 by the Associate Justice Associate Justice
Court of Final Appeal of the HK.SAR, this case was
already pending consideration on appeal by the CA. NOEL GIMENEZ ANDRES B. REYES,
The CA promulgated the assailed amended decision on TIJAM JR.
March 1, 2013 upon Muñoz's motion for Associate Justice Associate Justice
reconsideration in order to declare that he could not
be extradited for the crime of accepting an advantage
as an agent due to non-compliance with the dual ALEXANDER G. GESMUNDO
criminality rule. All throughout this time, the petitioner Associate Justice
did not seasonably and properly apprise the CA of the
relevant case law in its jurisdiction. It was only in the CERTIFICATION
motion for reconsideration that the petitioner
apprised the Court of the ruling, but mentioned only
Pursuant to the Section 13, Article VIII of the
the title of the case. The petitioner did not attempt to
Constitution, I certify that the conclusions in the above
prove the ruling as a fact.
Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the
The petitioner's belatedness in bringing the ruling to Court’s Division.
our attention was another proof of the ruling's lack of
relevance and applicability herein.
MARIA LOURDES P.A. SERENO
Chief Justice
It is also notable that the petitioner did not present an
official publication of the ruling or at least a copy of it
attested by the proper office or officer having legal
custody (if attestation was the rule in that
jurisdiction). As a consequence, the ruling was not also
shown to be a public document under the laws of the Footnotes
HK.SAR.
* On official time.
ACCORDINGLY, the Court DENIES the motion for
reconsideration with finality. ** On official business.

SO ORDERED. *** On official time.

LUCAS P. BERSAMIN **** On official business.

Associate Justice
***** On leave.
WE CONCUR:
1 Rollo, pp. 184-196.
MARIA LOURDES P.A. SERENO
Chief Justice 2 Id. at 147-170.

3Id. at 20-26; penned by Associate Justice

(On Official Time) Hakim Abdulwahid, with the concurrence of
ANTONIO T. CARPIO PRESBITERO J. Associate Justice Marlene Gonzales-Sison and
Associate Justice VELASCO, JR. Associate Justice Edwin D. Sorongon.
Associate Justice
4 Id. at 192.
(On Official Business)
TERESITA J. DIOSDADO M. 5G.R. No. 188289, August 20, 2014, 733 SCRA
LEONARDO-DE PERALTA 528.
CASTRO Associate Justice
Associate Justice 6 Id. at 540-541.

(On Official Time) (On Official Business) 7See Garcia v. Recio, G.R. No. 138322, October
MARIANO C. DEL ESTELA M. PERLAS- 2, 2001, 366 SCRA 437, 451-452.
CASTILLO BERNABE
Associate Justice Associate Justice
The Lawphil Project - Arellano Law Foundation
(On Leave)
MARVIC M.V.F.
FRANCIS H.
LEONEN G.R. No. 193782, August 01, 2018
JARDELEZA
Associate Justice
Associate Justice
DALE STRICKLAND, Petitioner, v. ERNST & YOUNG
LLP, Respondent.
ALFREDO BENJAMIN SAMUEL R.
G.R. No. 210695

93

DALE STRICKLAND, Petitioner, v. PUNONGBAYAN &
ARAULLO, Respondent.
DECISION
JARDELEZA, J.:
These are consolidated petitions for review
on certiorari1 under Rule 45 of the Rules of Court both
filed by petitioner Dale Strickland (Strickland): (1) G.R.
No. 193782 is against respondent Ernst & Young LLP
(EYLLP) assailing the Decision2 dated June 17, 2010 of
the Court of Appeals (CA) in CA-G.R. SP No. 102805
which annulled and set aside the Orders3 of the
Regional Trial Court, Branch 150, Makati City, ordered
EYLLP to be dropped as defendant in Civil Case No. 05-
692, and referred the dispute between Strickland and
EYLLP to arbitration;4 and (2) G.R. No. 210695, which
is against respondent Punongbayan & Araullo (PA),
and assails the Decision5 dated August 5, 2013 of the
CA in CA-G.R. SP No. 120897 which declared null and
void the Orders6 of the RTC and directed it to suspend
proceedings in the same Civil Case No. 05-692.7
Civil Case No. 05-692 is a complaint8 filed by
Strickland against, among others, respondents PA and
EYLLP praying for collection of sum of money.
On March 26, 2002, National Home Mortgage Finance
Corporation (NHMFC) and PA entered into a Financial
Advisory Services Agreement (FASA) for the
liquidation of the NHMFC's Unified Home Lending
Program (UHLP). At the time of the engagement, PA
was the Philippine member of respondent global
company, EYLLP. In the March 26, 2002 letter9 of PA to
NHMFC confirming their engagement as exclusive
Financial Advisor for the UHLP Project, PA is
designated as P&A/Ernst & Young.10
During this period, Strickland was a partner of EYLLP
seconded to respondent Ernst & Young Asia Pacific
Financial Solutions (EYAPFS),11 who was listed in the
FASA as member of the Engagement Team, in
pertinent part:
Our Engagement Team is highly experienced and
qualified in planning, managing and executing similar
transactions. Our Team will be lead by cross-border
professionals supplied by both Ernst & Young Asia
Pacific Financial Solutions LLC ("EY/APFS") and
P&A[/]ERNST & YOUNG. P&A ERNST & YOUNG has
assembled a group of Financial Consultants with the
specific individual expertise to address the
requirements for this engagement. The key members
of the Team include:
Due Diligence & Transaction Support
Lead Due Diligence Partner - Dale Strickland,
EY/APFS12
Significantly, Strickland played a role in negotiating
the FASA between PA and NHMFC. In a letter dated
April 15, 2002, PA wrote Strickland to formalize the
working relationship between PA/EYLLP and
EY/APFS for the FASA with NHMFC:
Dear Dale,
Ernst & Young, as represented by Punongbayan &
Araullo, the Ernst & Young member firm in the
Philippines (P&A/ERNST & YOUNG) and Ernst &
Young Asia Pacific Solutions LLC (EY/APFS) was
chosen as the exclusive Financial Advisor for National
Home Mortgage Finance Corporation (NHMFC) with
respect to the liquidation of its Php40 Billion Unified
Home Lending Program (UHLP) portfolio (or the
"Transaction"). P&A/ERNST & YOUNG acted as the
contracting party, on behalf of EY/APFS, and signed
the contract with NHMFC to officially kick-off the
engagement.
In line with this, we would like to underscore several
issues, which would formalize the working
relationship between P&A/ERNST & YOUNG and
EY/APFS.
1)
P&A/ERNST & YOUNG will be the contracting party to
the NHMFC engagement and will sub contract to
EY/APFS key aspects of the engagement as well as
source the technical expertise of EY/APFS staff, as
outlined in the Technical Proposal submitted to the
Pre-qualification, Bids and Awards Committee (PBAC).
2)
EY/APFS will provide a list of its staff members with
individual expertise, who will be seconded to
P&A/ERNST & YOUNG, including Marisa Liu or other
EY/APFS Managers such as Hye Soo Shim or Beaux
Pontac.
3)
P&A/ERNST & YOUNG will bill and receive payments
directly from NHMFC and shall forward the balance
due EY/APFS in U.S. Dollars at an exchange rate of 51
Philippine Pesos to One (1) U.S. Dollar.
4)
Based on the initial Technical Proposal, Total Fees for
this engagement will be U.S.$2.25 Million broken into
a Fixed Fee of U.S.$1.5 Million for the Due Diligence
portion and a Success Fee of U.S.$750 Thousand. The
Fixed Fee sharing will be U.S.$690 Thousand for
P&A/ERNST & YOUNG and U.S.$810 Thousand for
EY/APFS or 46% and 54%, respectively, in accordance
with the terms of the initial Technical Proposal.
However, we wish to point out that due to
modifications made on the Success Fee po ion of the
Technical Proposal, any fee above U.S 2.25 Million
shall be split equally (50%-50%) between
P&A/ERNST & YOUNG and EY/APFS.
5)
EY/APFS and P&A/ERNST & YOUNG will guarantee
the success of this project.
Once again, we wish to express our appreciation for
the opportunity you have accorded us to undertake
this pursuit with you. We look forward to working
with you in this engagement.
Thank you very much.13
By June 6, 2002, EYLLP wrote PA of the termination of
its membership in EYLLP.14 Despite the termination,
the working relationship among the parties continued.
In an assignment letter15 dated November 15, 2002,
EYLLP confirmed Strickland's assignment to Manila as
a partner and summarized the working arrangement,
specifying the following provisions: (1) assignment
and the terms; (2) compensation and benefits; (3) tax;
(4) change of circumstances; (5) repatriation; and (6)
acceptance.
94
In July 2004, the transactional relationship between
the parties went awry. In an exchange of letters, notice
was given to NHMFC of PA's intention to remove
Strickland from the NHMFC Engagement Team as a
result of Strickland's resignation from EYLLP and/or
EYAPFS effective on July 2, 2004.16 Responding to
NHMFC's concerns on the removal of Strickland from
the UHLP Project and his replacement by Mark Grinis
(Grinis), EYAPFS' Managing Director, EYLLP reiterated
Grinis' qualifications and affirmed its team of
professionals' dedication of "all the time necessary to
close this transaction and to make NHMFC [their
team's, headed by Grinis,] first priority."17
Since NHMFC was intent on retaining Strickland's
services despite his separation from EYLLP and/or
EYAPFS, the parties entered into negotiations to define
Strickland's possible continued participation in the
UHLP Project. PA, NHMFC, and Strickland exchanged
letters containing proposed amendments to cover the
new engagement and Strickland's participation within
the UHLP Project.18 No actual written and final
agreement among the parties amending the original
engagement letter of March 26, 2002 materialized.
On August 20, 2004, PA wrote a letter,19 signed by its
President/Chairman & CEO, Benjamin R.
Punongbayan, to NHMFC to initiate discussions on a
"mutual voluntary termination of the NHMFC
Agreement."20
On November 18, 2003, PA and NHMFC executed an
addendum to the March 26, 2002 original engagement
letter covering additional terms of the financial
advisory services.21
Subsequently, conflict on Strickland's actual
participation and concurrent designation on the
project arose among PA, NHMFC, and Strickland as
reflected in the proposed revisions to the "Draft
Financial Advisory Services" initially prepared by PA.22
The timeline of specific occurrences is contained in the
letter23 of PA to NHMFC dated December 20, 2004:
[PA] subsequently met on September 6, 2004 with Mr.
Angelico T. Salud, then president of NHMFC. In that
meeting, Mr. Salud asked that P&A and EYAPFS
continue with the project and remain as financial
advisors to NHMFC. But he also proposed that NHMFC
will hire Mr. Strickland for a nominal compensation
from NHMFC so that Mr. Strickland can continue to
participate in the project and work together with us.
Right after that meeting, P&A and EYAPFS x x x
decided to accept its proposal in order to finally
resolve this pending matter. However, before anything
can be finalized, a change in the management of
NHMFC occurred. We sought to meet with the new
president, Mr. Celso delos Angeles, and were able to
meet with him on October 20, 2004. In that meeting, it
was confirmed by both parties that NHMFC will hire
Mr. Strickland and this engagement will be the basis
for moving forward. We then proceeded to conclude
with Mr. Strickland the discussion about his
compensation which was proposed to come out of the
success fee for the engagement. We also drew up the
draft agreement that was submitted on November 19,
2004 to both NHMFC and Mr. Strickland for their
review.24
PA objected to Strickland's proposed amendments,
specifically on the terms of compensation, which now
contemplated PA's engagement of Strickland as
subcontractor for the closing of the UHLP Project.25
By May 23, 2005, counsel for Strickland wrote PA
asking for "equitable compensation for professional
services" rendered to NHMFC on the UHLP Project
from the time of his separation from EYLLP and/or
EYAPFS in July 2004 "up and through the recent
Signing and Closing Ceremony held on 22 April 2004
and his continued provision of services as the final
closing approaches."26
On June 2, 2005, counsel for PA responded,
categorically denying any contractual relationship
with Strickland and his assertion that he effectively
substituted EYLLP and/or EYAPFS for the portion of
the work he carried out in the UHLP Project.27
Succeeding events are fairly summarized by the CA in
CA-G.R. SP No. 120897:
Thus, [Strickland] filed a Complaint, dated May 17,
2005, which included [EYAPFS], [PA] and NHMFC
among the defendants, seeking the following reliefs:
"Based on the foregoing, [Strickland] respectfully prays
for judgment directing defendants, either jointly or
severally or solidarily, or one or some or all defendants
as may be deemed appropriate after trial, to pay
[Strickland] Eighteen Million Pesos (=P=18,000,000.00)
as equitable compensation for services rendered or
actual or nominal damages, moral damages, and
attorney's fees as may be proved."
Subsequent to the complaint, [EYLLP and/or EYAPFS]
filed a "Motion to Refer to Arbitration," dated
February 27, 2006.
In the meantime, x x x Strickland filed an Amended
Complaint, dated June 29, 2006, adding more causes of
action and including Strickland's replacement Mark
Grinis as a party-defendant while deleting several
defendants but retaining [EYLLP and/or EYAPFSJ,
NHMFC and [PA].
The trial court admitted the Amended Complaint in its
Order, dated December 6, 2006. Subsequently, it also
issued an Order, dated January 2, 2007, denying
[EYAPFS'] Motion To Refer to Arbitration, thus:
"The dispute between the defendants and [Strickland]
covers domestic arbitral proceedings and cannot be
categorized as a commercial dispute of an international
character since the dispute arose from their
professional and service relationship and does not cover
matters arising from a relationship of a commercial
nature or commercial intercourse that would qualify as
commercial. The agreement has also no reasonable
relationship with one or more foreign states.
It appearing therefore that the arbitral clause in
question is inoperative or incapable of being performed
in this jurisdiction referral to arbitration in the United
States pursuant to the arbitration clause is uncalled for.
Accordingly, the motion is denied.
SO ORDERED."
[EYLLP and/or EYAPFS] sought reconsideration of the
aforequoted Order, which was also denied by the trial
court, prompting it to file a Petition for Certiorari
before this Court, docketed as CA-G.R. SP No. 102805.
The same was resolved by the Seventh Division in a
95
Decision, dated June 17, 2010, annulling the ruling of
the trial court, viz:
"WHEREFORE, premises considered, the Petition
is GRANTED. The Orders dated January 2, 2007 and
January 16, 2008, and any further orders or actions
after the filing of this Petition taken against x x x Ernst
& Young LLP, issued or made by the Han. Elmo M.
Alameda, Presiding Judge of the Regional Trial Court of
Makati City, Branch 150, in Civil Case No. 05-692
are ANNULLED and SET ASIDE. Accordingly, [EYLLP] is
ordered dropped from Civil Case No. 05-692 and the
dispute between [EYLLP] and Dale Strickland is hereby
referred to arbitration.
SO ORDERED."
Pursuant to the said ruling, x x x [PA] filed a Motion to
Suspend with Motion to Reset Pre-Trial Conference on
the ground that any settlement during the arbitration
between [EYLLP] and Strickland may cause prejudice
to [PA] ifthe trial court proceedings are continued as
Strickland's cause of action against [PA] was merely
incidental to that against [EYLLP].
[PA's] Motion, however, was denied in the first
assailed Order, dated March 11, 2011, the dispositive
portion of which reads:
"The decision of the Court of Appeals dated June 17,
2010 ordering the dispute between [Strickland] and
[EYLLP] to be reforred to in arbitration is clear. The
aforesaid decision involves [Strickland] and [EYLLP]
only. Since [PA] is not a party thereto, it cannot enforce
the same or find relief thereto. Only [EYLLP] is benefited
from the decision.
WHEREFORE, in the light of the foregoing disquisition,
the motion to suspend proceedings is DENIED.
Pre-trial will push through as scheduled on March 22,
2011 at 9:00 o'clock in the morning. [EYLLP] is excluded
therefrom.
SO ORDERED."28 (Citations omitted.)
PA filed a motion for reconsideration which the RTC
denied in its May 19, 2011 Order.29 Thus, PA filed a
petition for certiorari before the CA docketed as CA-
G.R. SP No. 120897, alleging grave abuse of discretion
in the RTC's Orders denying its motion to suspend
proceedings.30
As adverted to, the CA annulled the March 11 and May
19, 2011 Orders:
WHEREFORE, in view of the foregoing, the Petition for
Certiorari is GRANTED. The Orders, dated March 11,
2011 and May 19, 2011, issued by the Regional Trial
Court of Makati City, Branch 150, in Civil Case No. 05-
692, are DECLARED NULL and VOID. The Regional
Trial Court of Makati City, Branch 150, is directed
to SUSPEND its proceedings in the aforementioned
case pending arbitration.31 (Citations omitted.)
Hence, these consolidated petitions filed by Strickland.
In G.R. No. 193782, Strickland raises the following
issues:
WHETHER THE COURT OF APPEALS DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF
JUDICIAL PROCEEDINGS WHEN IT RELIED ON AN
UNSIGNED AND UNAUTHENTICATED "PARTNERSHIP
AGREEMENT" WHICH WAS NOT PROPERLY
PRODUCED, PLEADED, AUTHENTICATED AND
PROVED.
WHETHER THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW WHEN IT EVEN CONSIDERED MR.
STRICKLAND A PARTNER EVEN IF THIS ISSUE WAS
NOT YET RULED ON BY THE TRIAL COURT
VIOLATING THE RULE THAT THE COURT OF APPEALS
CANNOT TAKE UP ISSUES IN THE FIRST INSTANCE
ESPECIALLY WHEN THE ISSUE INVOLVED
QUESTIONS OF FACT THAT HAVE NOT BEEN
SUBJECTED TO EVIDENTIARY PROCEEDING.
WHETHER OR NOT THE COURT OF APPEALS
DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
IN ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS WHEN IT HELD THAT MR. STRICKLAND'S
CLAIMS FOR DAMAGES FROM E&Y'S TORTIOUS
CONDUCT IS ARBITRABLE.32
In G.R. No. 210695, Strickland posits the following
issues:
WHETHER THE COURT OF APPEALS DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF
JUDICIAL PROCEEDINGS WHEN IT [PRECIPITATELY]
CONCLUDED THAT P&A WAS AN AGENT OF E&Y
WITHOUT THE COURT OF APPEALS OR THE RTC
CONDUCTING AN EVIDENTIARY HEARING[.]
WHETHER THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW SUSPEND[ING] THE PROCEEDINGS IN
THE RTC AGAINST P&A BECAUSE THE CAUSES OF
ACTION AGAINST P&A AND E&Y ARE ALLEGEDLY
"INTRICATELY INTERTWINED[,"] WITHOUT AN
EVIDENTIARY HEARING HELD EITHER AT THE
COURT OF APPEALS OR THE RTC[.]
WHETHER THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW WHEN IT SUSPENDED THE
PROCEEDINGS IN THE RTC BECAUSE OF AN ALLEGED
BINDING ARBITRATION CONTRACT BETWEEN E&Y
AND STRICKLAND WHICH HAS NOT BEEN PROVED
OR AUTHENTICATED[.]
WHETHER THE COURT OF APPEALS DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF
JUDICIAL PROCEEDINGS AND ALSO COMMITTED AN
ERROR OF LAW WHEN IT CONCLUDED THAT THERE
IS A PENDING ARBITRATION PROCEEDING, WITHOUT
EVIDENCE THEREFOR, BETWEEN STRICKLAND AND
[EYLLP], VIOLATING THE RULE THAT THE COURT OF
APPEALS CANNOT TAKE UP FACTUAL ISSUES IN THE
FIRST INSTANCE[.]
WHETHER THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW WHEN IT HELD THAT THE
PRESIDING JUDGE COMMIT[T]ED GRAVE ABUSE OF
DISCRETION WHEN HE REFUSED TO SUSPEND THE
PROCEEDINGS AGAINST P&A AS A MATTER OF
"JUDICIAL COURTESY" AND "PROPRIETY[."]
WHETHER THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW WHEN IT HELD THAT THE
PRESIDING JUDGE COMMIT[T]ED GRAVE ABUSE OF
DISCRETION IN REFUSING TO SUSPEND THE
PROCEEDINGS AGAINST P&A IN ALLEGED VIOLATION
OF THE RULE ON LITIS PENDENTIA[.]
WHETHER THE COURT OF APPEALS DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF
JUDICIAL PROCEEDINGS WHEN IT SUSPENDED THE
ENTIRE PROCEEDINGS IN THE RTC AND NOT ONLY
P&A BUT ALSO AS TO NHMFC EVEN IF P&A'S
96
PETITION FOR CERTIORARI RAISED ARGUMENTS
FOR THE SUSPENSION SOLELY RELEVANT TO P&A
AND NOT TO NHMFC.
WHETHER OR NOT THE COURT OF APPEALS
DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
IN ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS WHEN IT HELD ARBITRATION
PROCEEDINGS AMONG SOME PARTIES NECESSARILY
SUSPENDS THE PROCEEDINGS BEFORE THE
REGULAR COURTS.33
We simplify the issues for our resolution, to wit:
1. In G.R. No. 193782, whether the CA erred in
referring the dispute between Strickland and EYLLP to
arbitration and ordering that EYLLP be dropped as
defendant in Civil Case No. 05-692.
1.1 Whether the Partnership Agreement34 was
properly alleged and proven according to Section 7,
Rule 8 of the Rules of Court on actionable documents;
and
1.2 Whether the dispute between Strickland and
EYLLP based on Strickland's complaint is arbitrable.
2. In G.R. No. 210695, whether the CA erred anew
when it suspended the proceedings in Civil Case No.
05-692 pending the arbitration between Strickland
and EYLLP.
2.1 Whether PA is an agent of EYLLP; and
2.2 Whether Strickland's causes of action against all
the defendants are intricately intertwined such that
the separate causes of action against PA and the other
impleaded defendants cannot independently proceed
from the arbitration between Strickland and EYLLP.
We deny the petitions.
I case, since petitioner alleged that the contract
In annulling the January 2, 2007 and January 16, 2008
Orders of the RTC, the CA ruled that: (1) EYLLP
substantially complied with Section 7, Rule 8 of the
Rules of Court o setting forth actionable documents in
a pleading; (2) the Partnership Agreement indeed
contained a valid arbitration clause; and (3) applying
processual presumption, albeit EYLLP failed to prove
the applicable foreign law, the dispute between EYLLP
and Strickland falls under the category of international
commercial arbitration.35
Strickland contends that the CA's referral of the
dispute between EYLLP and Strickland to arbitration
is grave error since EYLLP failed to properly allege
and prove the Partnership Agreement. Absent an
actionable Partnership Agreement, there is no existing
arbitration clause.36
We are not persuaded. We do not find reversible error
in the Decision of the CA in CA-G.R. SP No. 102805.
Section 7, Rule 8 of the Rules of Court provides:
Sec. 7. Action or defense based on document. Whenever
an action or defense is based upon a written
instrument or document, the substance of such
instrument or document shall be set forth in the
pleading, and the original or a copy thereof shall be
attached to the pleading as an exhibit, which shall be
deemed to be a part of the pleading, or said copy may
with like effect be set forth in the pleading.
In this case, EYLLP initially only quoted the provisiOn
of the Partnership Agreement on Dispute Resolution,
including a section on Arbitration, in its
answer37 dated February 15, 2006. Eventually, it
submitted a copy of the Partnership Agreement in a
manifestation38 dated March 15, 2006. Thus, we agree
with the holding of the CA that EYLLP substantially,
and ultimately, complied with the provision given that
Strickland himself did, and does not even deny, the
Partnership Agreement nor the arbitration clause.
In Cargill Philippines, Inc. v. San Fernando Regala
Trading, Inc.,39 we discussed at length the nature of an
arbitration clause as a contract in itself and the
continued referral of a dispute to arbitration despite a
party's repudiation of the main contract:
Arbitration, as an alternative mode of settling
disputes, has long been recognized and accepted in
our jurisdiction. R.A. No. 876 authorizes arbitration of
domestic disputes. Foreign arbitration, as a system of
settling commercial disputes of an international
character, is likewise recognized. The enactment of
R.A. No. 9285 on April 2, 2004 further institutionalized
the use of alternative dispute resolution systems,
including arbitration, in the settlement of disputes.
A contract is required for arbitration to take place and
to be binding. Submission to arbitration is a contract
and a clause in a contract providing that all matters in
dispute between the parties shall be referred to
arbitration is a contract. The provision to submit to
arbitration any dispute arising therefrom and the
relationship of the parties is part of the contract and is
itself a contract.
xxxx
The CA ruled that arbitration cannot be ordered in this
between the parties did not exist or was invalid and
arbitration is not proper when one of the parties
repudiates the existence or validity of the contract. x x
x
xxxx
However, the Gonzales case, which the CA relied upon
for not ordering arbitration, had been modified upon a
motion for reconsideration in this wise:
"x x x The adjudication of the petition in G.R. No.
167994 effectively modifies part of the Decision
dated 28 February 2005 in G.R. No. 161957. Hence,
we now hold that the validity of the contract
containing the agreement to submit to arbitration
does not affect the applicability of the arbitration
clause itself. A contrary ruling would suggest that a
party's mere repudiation of the main contract is
sufficient to avoid arbitration. That is exactly the
situation that the separability doctrine, as well as
jurisprudence applying it, seeks to avoid. We add
that when it was declared in G.R. No. 161957 that the
case should not be brought for arbitration, it should be
clarified that the case referred to is the case actually
filed by Gonzales before the DENR Panel of
Arbitrators, which was for the nullification of the main
contract on the ground of fraud, as it had already been
determined that the case should have been brought
97
before the regular courts involving as it did judicial
issues."
In so ruling that the validity of the contract containing
the arbitration agreement does not affect the
applicability of the arbitration clause itself, we then
applied the doctrine of separability, thus:
"The doctrine of separability, or severability as other
writers call it, enunciates that an arbitration
agreement is independent of the main contract. The
arbitration agreement is to be treated as a separate
agreement and the arbitration agreement does not
automatically terminate when the contract of which it
is a part comes to an end.
The separability of the arbitration agreement is
especially significant to the determination of whether
the invalidity of the main contract also nullifies the
arbitration clause. Indeed, the doctrine denotes that
the invalidity of the main contract, also referred to as
the "container" contract, does not affect the validity of
the arbitration agreement. Irrespective of the fact that
the main contract is invalid, the arbitration
clause/agreement still remains valid and
enforceable."40 (Citations omitted; emphasis supplied.)
Here, we consider the Partnership Agreement which
explicitly provides for alternative dispute resolution:
16. Dispute Resolution
(a)
Resolution of Disputes. Any dispute, claim or
controversy between (i) the Firm and any Partner or
Former Partner or (ii) any Partner or any Former
Partner and any other Partner or Former Partner (to
the extent such dispute, claim or controversy relates
to their association with the Firm and/or its business
and affairs), whether arising or being asserted during
or after the termination of any such individual's
relationship with the Firm (a "Dispute"), shall be
resolved as provided in this Section.
xxxx
(b)
Procedure. Except as otherwise provided herein, all
Disputes shall be resolved by first submitting them to
voluntary mediation in accordance with the
procedures set forth in paragraph (c) of this Section
and, if such mediation is not successful, then to
binding arbitration in accordance with paragraphs (d)
and (e) of this Section.
xxxx
(d)
Arbitration. Any arbitration hereunder will be
conducted in accordance with the procedures set forth
herein and the Rules for Non-Administered
Arbitration of the CPR Institute for Dispute Resolution
as in effect on the date hereof, or such other rules
mutually agreed upon by the parties. x x x
(i)
The arbitration will be held either in the County and
State of New York or in the County and State where
the Firm is organized as an LLP, or at another location
if so ordered by a court in an action to compel
arbitration. x x x
(ii)
Any issue concerning the extent to which any Dispute
is subject to arbitration, or the formation, applicability,
interpretation or enforceability of the provisions of
this Section, including any claim or contention that all
or any part of this Agreement is void or voidable, will
be governed by the Federal Arbitration Act and will be
resolved by the arbitrators.41
Plainly, considering that the arbitration clause is in
itself a contract, the setting forth of its provisions in
EYLLP's answer and in its motion to refer to
arbitration,42 coupled with the actual submission by
EYLLP of the Partnership Agreement, complies with
the requirements of Section 7, Rule 8 of the Rules of
Court which Strickland should have specifically
denied.43
We note that while the cases before us have a foreign
element involving foreign parties and international
transactions, the parties do not question the
jurisdiction of our courts to hear and decide the case.
The parties quibble only on whether the dispute
between Strickland and EYLLP should be referred to
arbitration despite Strickland's alleged causes of
action based on tortious conduct of the parties in
refusing to compensate him for services rendered.
Moreover, in relation to the other defendants,
specifically respondent PA, the issue pertains to the
suspension of the proceedings in Civil Case No. 05-692
pending resolution of the arbitration between
Strickland and EYLLP.
We have consistently affirmed that commercial
relationships covered by our arbitration laws are
purely private and contractual in nature. Article 1306
of the Civil Code provides for autonomy of contracts
where the parties are free to stipulate on such terms
and conditions except for those which go against law,
morals, and public policy. In our jurisdiction,
commercial arbitration is a purely private system of
adjudication facilitated by private citizens which we
have consistently recognized as valid, binding, and
enforceable.44
Thus, we agree with the CA's ruling on the nature of
the contract between Strickland and EYLLP, and its
application of our commercial arbitration laws to this
case:
x x x "[T]he International Law doctrine of presumed-
identity approach or processual presumption comes
into play. Where a foreign law is not pleaded, or, even
if pleaded, is not proved, the presumption is that
foreign law is the same as ours."
In this jurisdiction, one of the laws governing
arbitration is the [Alternative Dispute Resolution
(ADR)] Act. Under this statute, international
commercial arbitration shall be governed by the Model
Law on International Commercial Arbitration ("Model
Law") adopted by the United Nations Commission on
International Trade Law. Meanwhile, domestic
arbitration is governed by the Arbitration Law as
amended by the ADR Act.
To determine the applicable law here, the nature of
the arbitration sought to be undertaken must be
looked at. The ADR Act defines domestic arbitration
negatively by stating that it is one that is not
international as defined in the Model Law[]. In turn,
Article 1 (3) of the Model Law provides that an
arbitration is international if:
"(a)
the parties to an arbitration agreement have, at the
time of the conclusion of that agreement, their places
of business in different States; or
(b)
98
one of the following places is situated outside the
State in which the parties have their places of
business:
(i)
the place of arbitration if determined in, or pursuant
to, the arbitration agreement;
(ii)
any place where a substantial part of the obligations of
the commercial relationship is to be performed or the
place with which the subject-matter of the dispute
is most closely connected; or
(c)
the parties have expressly agreed that the subject-
matter of the arbitration agreement relates to more
than one country." x x x (Emphasis in the original;
citations omitted.)
It is obvious then that the arbitration sought in the
instant case is international for falling under
Article 1(3)(b)(ii) quoted above. The place of
business of EYLLP is in the United States of
America. x x x It is here [the Philippines] that the
services for which [Strickland] seeks
remuneration were rendered. (Emphasis supplied.)
For the Model Law to apply, however, the arbitration
should also be commercial. The explanatory footnote
to Article 1(l) of the Model Law explains that "[t]he
term 'commercial' should be given a wide
interpretation so as to cover matters arising from all
relationships of a commercial nature, whether
contractual or not." It also states that relationships of a
commercial nature include the following transactions
among others:
"any trade transaction for the supply or exchange of
goods or services; distribution agreement; commercial
representation or agency; factoring; leasing;
construction of works; consulting; engineering;
licensing; investment; financing; banking; insurance;
exploitation agreement or concession; joint venture
and other forms of industrial or business co-
operation; carriage of goods or passengers by air, sea,
rail or road." x x x
The meaning attached to the term "commercial" by the
Model Law is broad enough to cover a partnership.
The Civil Code x x x defines a partnership as a contract
where "two or more persons bind themselves to
contribute money, property, or industry to a common
fund, with the intention of dividing the profits among
themselves." Hence, considering that EYLLP and
Strickland had a partnership relationship, which was
not changed during his assignment [to] Manila for the
Project, the request for arbitration here has a
commercial character. The dispute between the said
parties relates to Strickland's and EYLLP's association
with each other.45 x x x (Emphasis and underscoring in
the original; citations omitted.)
The following factors further militate against
Strickland's insistence on Philippine courts to
primarily adjudicate his claims of tortious conduct,
and not commercial arbitration, as stipulated in the
Partnership Agreement:
1. From his complaint and amended complaint,
Strickland's causes of action against EYLLP and PA
hinge primarily on contract, i.e., the Partnership
Agreement, and the resulting transactions and
working relationship among the parties, where
Strickland seeks to be paid.46
2. The Partnership Agreement is bolstered by the
assignment letter of EYLLP to Strickland confirming
his assignment to Manila as partner and which
assignment letter contains a choice of law provision:
I. ASSIGNMENT
Terms of Assignment
xxxx
During the assignment, you will be seconded to Asia
Pacific Financial Solutions LLC and subject to its rules
and regulations. Additionally, you must abide by all
laws in the Philippines. It is also expected that you will
conduct yourself in a professional manner at all times,
and carry out your duties and responsibilities in the
high standard achieved throughout Ernst & Young
practices worldwide.
This assignment letter will be governed by, and
construed in accordance with, the laws of the U.S.,
under which the firm and you agree to the
exclusive jurisdiction of the U.S. courts. In
addition, all terms and conditions of your
Partnership Agreement with Ernst & Young LLP,
which are not consistent with this letter, shall
remain in full force and effect.47 (Emphasis
supplied.)
3. The allegations in Strickland's complaint,
specifically his narration of facts, admit that the entire
controversy stems from his working relationship with
EYLLP as a partner, thus:
(14)(9) When the NHMFC Agreement was signed,
[Strickland] was a Partner in E&Y and held the title of
Managing Director of Ernst & Young Asia Pacific
Financial Solutions LLC ("EYAPFS"), a 100% owned
and controlled subsidiary of Ernst & Young LLP
("E&Y").48 x x x
On the whole, the dispute between Strickland and
EYLLP, even considering the former's allegations of
tortious conduct, were properly referred by the CA to
arbitration.
II
In its Decision in CA-G.R. SP No. 120897, the CA
suspended the proceedings in Civil Case No. 05-692,
finding that: (1) PA is an agent of EYLLP who cannot
be sued by Strickland on the contract of employment
between Strickland and EYLLP/EYAPFS; and (2) even
without delving into the contract of agency between
PA and EYLLP/EYAPFS, "a comparison of the causes of
action against [EYLLP/EYAPFS] and x x x PA would
justify a suspension of the proceedings in the trial
court."49
Strickland maintains, however, that the CA's
suspension of the proceedings in Civil Case No. 05-692
is grave error because: (1) the Partnership Agreement
containing the arbitration clause was not sufficiently
proved and authenticated;50 (2) the CA should have
ordered the RTC to conduct an evidentiary hearing on
the factual assertions that PA is an agent of
EYLLP/EYAPFS and that the causes of action of
Strickland against EYLLP are intricately intertwined
with those against PA and the other defendants;51 and
(3) Strickland has distinct causes of action against
other defendants such as NHMFC.52
We disagree. We affirm the CA's ruling.
99

First. PA was unequivocally an agent of EYLLP at the
time it executed, as Philippine Member of the EYLLP
global company, the FASA with NHMFC for the UHLP
Project.
The records bear out in at least two documents that
PA represented EYLLP/EYAPFS in the FASA with
NHMFC for the UHLP Project, to wit:
1. The April 15, 2002 letter of PA to Strickland:
Dear Dale,
Ernst & Young, as represented by Punongbayan &
Araullo, the Ernst & Young member firm in the
Philippines (P&A/ERNST & YOUNG) and Ernst &
Young Asia Pacific Solutions LLC (EY/APFS) was
chosen as the exclusive Financial Advisor for National
Home Mortgage Finance Corporation (NHMFC) with
respect to the liquidation of its Php40 Billion Unified
Home Lending Program (UHLP) portfolio (or the
"Transaction"). P&A/ERNST & YOUNG acted as the
contracting party, on behalf of EY/APFS, and
signed the contract with NHMFC to officially kick-
off the engagement.53 (Emphasis supplied.)
2. The March 26, 2002 letter covering the FASA
between NHMFC and PA, where PA, as one of the
parties, was designated in all references as
"P&A/ERNST & YOUNG" or "P&A/E&Y."54
This fact of agency relationship between PA and
EYLLP cannot be denied and avoided by Strickland,
given Articles 1868 and 1873 of the Civil Code which
provides, thus:
Art. 1868. By the contract of agency a person binds
himself to render some service or to do something in
representation or on behalf of another, with the
consent or authority of the latter.
Art. 1873. If a person specially informs another or
states by public advertisement that he has given a
power of attorney to a third person, the latter thereby
becomes a duly authorized agent, in the former case
with respect to the person who received the special
information, and in the latter case with regard to any
person.
xxxx
Clearly, with the foregoing documents, PA is
considered an agent of EYLLP. We quote with favor the
analysis of the CAin CA-G.R. SP No. 120897:
x x x Strickland admitted the following: (1) that he is
an employee of Ernst & Young Asia, assigned to
different projects in Korea, Japan, Thailand, China and
the Philippines; and (2) that x x x P&A is an agent of
Ernst & Young Asia. Such agency is also reflected in the
letter addressed to Strickland, dated April 15, 2002,
stating that P&A was representing Ernst & Young Asia,
being its member firm located in the Philippines. P&A,
as agent of Ernst & Young Asia, was authorized to act
in behalf of the latter with regard to the liquidation of
the UHLP as financial advisor for NHMFC.
Having established the fact of agency, there is no
question that P&A derives its authority for the UHLP
liquidation from Ernst & Young Asia. As such agent,
P&A cannot sue and be sued on the contract of
employment between Strickland and Ernst & Young
Asia. As explained by a recognized authority in civil
law:
"(a) Normally, the agent has neither rights nor
liabilities as against the third party. He cannot sue or
be sued on the contract. Since the contract may be
violated only by the parties thereto against each
other, the real party-in-interest, either as plaintiff
or defendant in an action upon that contract must,
generally be a party to said contract."
In this case, the conflict arose from the terms of
Strickland's employment contract with Ernst & Young
Asia and P&A's involvement in the same was a mere
consequence that the termination occurred while the
UHLP was ongoing. The fact of agency in itself and the
aforequoted discussion of its effects shows that [PA's]
liability is anchored on that of Ernst & Young Asia,
giving rise to a reason why the trial court's
proceedings must be suspended in the light of the
pending arbitration proceedings between [PA's]
principal[, EYLLP,] and x x x Strickland.55 (Emphasis in
the original; citations omitted.)
Moreover, that PA is not a signatory to the Partnership
Agreement containing the arbitration clause is of no
moment. The arbitration clause is applicable to PA nd
effectively stays the proceedings against it.
In BF Corporation v. Court of Appeals,56 we ruled thus:
Petitioner's contention that there was no arbitration
clause because the contract incorporating said
provision is part of a "hodge-podge" document, is
therefore untenable. A contract need not be contained
in a single writing. It may be collected from several
different writings which do not conflict with each
other and which, when connected, show the parties,
subject matter, terms and consideration, as in
contracts entered into by correspondence. A contract
may be encompassed in several instruments even
though every instrument is not signed by the parties,
since it is sufficient if the unsigned instruments are
clearly identified or referred to and made part of the
signed instrument or instruments. Similarly, a written
agreement of which there are two copies, one signed
by each of the parties, is binding on both to the same
extent as though there had been only one copy of the
agreement and both had signed it.
The flaw in petitioner's contentions therefore lies in
its having segmented the various components of the
whole contract between the parties into several parts.
This notwithstanding, petitioner ironically admits the
execution of the Articles of Agreement. Notably, too,
the lower court found that the said Articles of
Agreement "also provides that the 'Contract
Documents' therein listed 'shall be deemed an integral
part of this Agreement,' and one of the said documents
is the 'Conditions of Contract' which contains the
Arbitration Clause.'" It is this Articles of Agreement
that was duly signed by Rufo B. Colayco, president of
private respondent SPI, and Bayani F. Fernando,
president of petitioner corporation. The same
agreement was duly subscribed before notary public
Nilberto R. Briones. In other words, the subscription of
the principal agreement effectively covered the other
documents incorporated by reference
therein.57 (Citations omitted.)
Second. The confusion arises because Strickland insists
on foregoing suit on his Partnership Agreement with
EYLLP precisely because such has an arbitration
clause and a choice of law provision. It is quite
apparent that Strickland wishes to sue all the
defendants before our courts based on a combination
of causes of action for violation of obligations arising
100
out of tort,58 quasi-contract,59 and contract.60However,
Strickland's allegations in both the complaint and
amended complaint are undoubtedly hinged, and
unavoidably linked, to his former contractual
relationship with EYLLP to which the present
controversy among all the parties can be traced:
(28)(23) It is likely that one of the reasons that P&A
refused to compensate him was because of the
influence of [EYLLP]. It is believed that [EYLLP] sought
to punish Mr. Strickland by trying to prevent him from
receiving compensation despite [EYLLP's] deliberate
and reckless abandonment of its contractual
responsibilities. NHMFC appears to have refused to
compensate [Strickland] because it was not
contractually bound by the Agreement to compensate
him, although NHMFC believed it could oblige
[Strickland] to complete the work because of [his]
designation as Project Manager.
(29)(24) [Strickland] is entitled to be compensated for
his work.61 x x x
The designation in Strickland's amended complaint of
"Additional Cause of Action Against [respondent
EYLLP]"62 further demonstrates that the totality of his
causes of action are actually anchored on the
disintegration of his working relationship with EYLLP
whom he faults for his failure to receive compensation
from the other defendants.
In a hodge podge of allegations, Strickland, without
being a party to the FASA between NHMFC and
PA/EYLLP, insists on the continuation of his suit
contending that his designation as "Lead Due Diligence
Partner," forming part of the Engagement Team,
entitles him to equitable compensation. Thus,
Strickland maintains that the proceedings in Civil Case
No. 05-692 should not have been suspended, and
should then proceed independently of the arbitration
between Strickland and EYLLP.
We do not agree. We do not find the designation of
Strickland in the Engagement Team of the FASA as a
stipulation pour atrui. Article 1311, paragraph 2 of the
Civil Code reads:
Art. 1311. x x x contract. Indeed, when the parties entered into a
If a contract should contain some stipulation in favor
of a third person, he may demand its fulfillment
provided he communicated his acceptance to the
obligor before its revocation. A mere incidental benefit
or interest of a person is not sufficient. The contracting
parties must have clearly and deliberately conferred a
favor upon a third person.
Considering the clear applicability of the Partnership
Agreement and the terms of the arbitration clause, and
absent a clear right-duty correlative63 which supports
Strickland's causes of action, the CA certainly did not
err in suspending the proceedings in CA-G.R. SP No.
120897.
Third. We are not unaware of previous holdings where
we disallowed suspension of trial pending arbitration,
even simultaneous arbitration proceedings and trial,
where the issue before the court could not then be
speedily and efficiently resolved in its entirety. We
emphasized that the object of arbitration (that is, to
expedite the determination of a dispute) would only
be served if the trial court hears and adjudicates the
case in a single and complete proceeding.64
The following circumstances underscore the high
probability of an expeditious resolution of the conflict
with the referral to arbitration of the dispute between
EYLLP and Strickland and the succeeding suspension
of the proceedings before the RTC in Civil Case No. 05-
692:
1. As previously stated, these cases comprise of a
foreign element, involving foreign parties and
international transactions. While the parties have not
questioned the jurisdiction of our courts, the RTC may
still refuse to assume jurisdiction.65
2. As previously discussed, the causes of action cited
by Strickland in his complaint (and amended
complaint) all undoubtedly relate to his Partnership
Agreement with EYLLP which is subject to arbitration.
This very same Partnership Agreement is even
reiterated in the November 15, 2002 Assignment
Letter assigning Strickland to Manila.66
3. Strickland himself admits that as Partner of EYLLP,
he was assigned to various parts of Asia. He has also
not denied that he was seconded to EYAPFS because of
certain tax consequences of his different
assignments.67 In fact, in his additional cause of action
against EYLLP, Strickland alleged, among others, that
EYLLP did not pay his correct taxes making him liable
for these.68 Evidently, the real dispute between
Strickland and EYLLP falls within its Partnership
Agreement involving its own choice of law provision.
In Crescent Petroleum, Ltd. v. M/V "Lok
Maheshwari,"69 the Court used balancing of basic
interest to weigh the varying foreign elements of the
case listed in the US case of Lauritzen v. Larsen.70 With
Philippine law falling only under one factor as the law
of the forum where petitioner Crescent filed suit, the
Court declared it inconceivable that the Philippine
court had any interest in the case that would outweigh
the interests of the involved foreign jurisdictions
(Canada or India).71 Ultimately, the Court held that:
Finally. The submission of petitioner is not in keeping
with the reasonable expectation of the parties to the
contract for supplies in Canada, they could not have
intended the laws of a remote country like the
Philippines to determine the creation of a lien by the
mere accident of the Vessel's being in Philippine
territory.72
In all, while we do not preclude Strickland from
pursuing all remedies available to him, we point out
that the factual circumstances obtaining here, given
that Strickland was then partner of the global
company EYLLP, the Philippines is not automatically
the law of the place of performance of the contract nor
is it the only factor to be considered in the ultimate
choice-of law final analysis.
WHEREFORE, the petitions in G.R. Nos. 193782 and
210695 are DENIED. The Decisions of the Court of
Appeals in CA-G.R. SP No. 102805 dated June 17, 2010
and CA-G.R. SP No. 120897 dated August 5, 2013
are AFFIRMED.
SO ORDERED.
Leonardo-De Castro,*(Acting Chairperson), Del Castillo,
Tijam, and Gesmundo,**JJ., concur.
101
 within the Asia Pacific Region. Rollo (G.R. No. 193782),
pp. 54-55; rollo (G.R. No. 210695), p. 128.
ATTESTATION
12Rollo (G.R. No. 210695), p. 110.
I attest that the conclusions in the above Decision had
been reached in consultation before the cases were 13Id.
at 787-788. Also cited in the Decision of the Court
assigned to the writer of the opinion of the Court's of Appeals in CA G.R. SP No. 120897, id. at 10-11.
Division.
14Id. at 689; records, pp. 126-127.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice 15 CA rollo (CA-G.R. SP No. 102805), pp. 263-266.
Acting Chairperson, First Division
16 See records, pp. 364-365.
CERTIFICATION
17Id. at 366.
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Chairperson's attestation, it is hereby 18Id.at 368-369; rollo (G.R. No. 193782), p.
certified that the conclusions in the above Decision 55; rollo (G.R. No. 210695), pp. 38, 308.
had been reached in consultation before the cases
were assigned to the writer of the opinion of the 19 Records, pp. 371-374.
Court's Division.
20Id. at 371.
ANTONIO T. CARPIO
Senior Associate Justice*** 21Id.

22 See records, pp. 525-531.

Endnotes:
23Id. at 1548-1550.

24Id. at 1549.
*Designated as Acting Chairperson of the First
Division per Special Order No. 2559 dated May 11, 25Id. at 1548
2018.
26Id. at 1551-1553; rollo (G.R. No. 210695), pp. 12-13.
Designated as Acting Member of the First Division
**

per Special Order No. 2560 dated May 11, 2018. 27Reeords, pp. 1554-1555; rollo (G.R. No. 210695), p.
1Rollo 13.
(G.R. No. 193782), pp. 9-48; rollo (G.R. No.
210695), pp. 34-91. 28Rollo (G.R. No. 210695), pp. 13-15.
2Rollo (G.R. No. 193782), pp. 54-67. Penned by 29Id. at 570.
Associate Justice Florito S. Macalino with Associate
Justices Juan Q. Enriquez, Jr. and Ramon M. Bato, Jr. 30Id. at 16.
concurring.
31Id. at 20.
3Dated January 2, 2007 and January 16, 2008,
respectively, id. at 54. 32Rollo (G.R. No. 193782), p. 25.
4Id. at 64. 33Rollo (G.R. No. 210695), pp. 50-52.
5Rollo (G.R. No. 210695), pp. 9-21. Penned by 34Rollo (G.R. No. 193782), pp. 189-193.
Associate Justice Agnes Reyes-Carpio with Associate
Justices Rosalinda Asuncion-Vicente and Priscilla J. 35Id. at 58-64.
Baltazar-Padilla concurring.
36Id. at 11.
6Dated March 11, 2011 and May 19, 2011,
respectively, id. at 9. 37 CA rollo (CA-G.R. SP No. 102805), pp. 65-72.
7Id. at 20. 38Id. at 90-91.
8Id. at 127-136. 39 G.R. No. 175404, January 31, 2011, 641 SCRA 31.
9Id. at 107-126. 40Id. at 43-46.
10Several of the correspondences between the parties 41Rollo (G.R. No. 193782), pp. 190-192.
refers to the Engagement Letter and the FASA as
NHMFC Agreement. The designations are used 42Id. at 79-85.
interchangeably throughout this Decision.
43 See RULES OF COURT, Rule 8, Sec. 8.
11 Subsidiary of EYLLP authorized to do business

102
44Fruehauf Electronics Philippines Corporation v.
Technology Electronics Assembly and Management ***Per Sec. 12 of Republic Act No. 296, The Judiciary Act
Pacific Corporation, G.R. No. 204197, November 2016, of 1948, as amended.
810 SCRA 280, 308.

45Rollo (G.R. No. 193782), pp. 59-60.

Citizenship
See Complaint and Amended Complaint, rollo (G.R.
46

No. 210695), pp. 127-136 and 181-211, respectively. G.R. No. 221697

47 CA rollo (CA-G.R. SP No. 102805), p. 263. MARY GRACE NATIVIDAD S. POE-

LLAMANZARES, Petitioners,
48Rollo (G.R. No. 210695), p. 186. vs.
COMELEC AND ESTRELLA C.
49Id. at 18. ELAMPARO Respondents.
50Id. at 71-72. x-----------------------x
51Id. at 60.
G.R. No. 221698-700
52Id. at 64-70, 86.
MARY GRACE NATIVIDAD S. POE-
53Id. at 787. LLAMANZARES, Petitioners,
vs.
54Id. at 107. COMELEC, FRANCISCO S. TATAD, ANTONIO P.
CONTRERAS AND AMADO D. VALDEZ Respondents.
55Id. at 17-18.
DECISION
56 G.R. No. 120105, March 27, 1998, 288 SCRA 267.
PEREZ, J.:
57Id. at 283-284.
Before the Court are two consolidated petitions under
58 See CIVIL CODE, Art. 2176. Rule 64 in relation to Rule 65 of the Rules of Court
with extremely urgent application for an ex
59 See CIVIL CODE, Arts. 2142 and 2143. parte issuance of temporary restraining order/status
quo ante order and/or writ of preliminary injunction
60 See CIVIL CODE, Art. 1157. assailing the following: (1) 1 December 2015
Resolution of the Commission on Elections
61Rollo (G.R. No. 210695), p. 190. (COMELEC) Second Division; (2) 23 December 2015
Resolution of the COMELEC En Banc, in SPA No. 15-
62Id. at 191. 001 (DC); (3) 11 December 2015 Resolution of the
COMELEC First Division; and ( 4) 23 December 2015
63 See RULES OF COURT, Rule 2, Sec. 2. Resolution of the COMELEC En Banc, in SPA No. 15-
002 (DC), SPA No. 15-007 (DC) and SPA No. 15-139
64See Del Monte Corporation-USA v. Court of Appeals, (DC) for having been issued without jurisdiction or
G.R. No. 136154, February 7, 2001, 351 SCRA 373, with grave abuse of discretion amounting to lack or
381-382, citing Heirs of Augusto L. Salas, Jr. v. Laperal excess of jurisdiction.
Realty Corporation, G.R. No. 135362, December 13,
1999, 320 SCRA 610.
The Facts
65See Crescent Petroleum, Ltd v. M/V "Lok
Maheshwari," G.R. No. 155014, November 11, 2005, Mary Grace Natividad S. Poe-Llamanzares (petitioner)
474 SCRA 623. was found abandoned as a newborn infant in the
Parish Church of Jaro, Iloilo by a certain Edgardo
66 See CA rollo (CA-G.R. SP No. 102805), p. 263. Militar (Edgardo) on 3 September 1968. Parental care
and custody over petitioner was passed on by Edgardo
67See email thread prior to Strickland's assignment to to his relatives, Emiliano Militar (Emiliano) and his
Manila to ensure that he maximizes his compensation wife. Three days after, 6 September 1968, Emiliano
benefits. Rollo (G.R. No. 210695), pp. 223-256. reported and registered petitioner as a foundling with
the Office of the Civil Registrar of Iloilo City (OCR-
68Id. at 197-201. Iloilo). In her Foundling Certificate and Certificate of
Live Birth, the petitioner was given the name "Mary
69Supra. Grace Natividad Contreras Militar." 1

70 345 U.S. 571 (1953). When petitioner was five (5) years old, celebrity
spouses Ronald Allan Kelley Poe (a.k.a. Fenando Poe,
71Crescent Petroleum, Ltd. v. M/V "Lok Maheshwari," Jr.) and Jesusa Sonora Poe (a.k.a. Susan Roces) filed a
supra note 65 at 641. petition for her adoption with the Municipal Trial
Court (MTC) of San Juan City. On 13 May 1974, the
72Id. at 641-642. trial court granted their petition and ordered that

103
petitioner's name be changed from "Mary Grace
Natividad Contreras Militar" to "Mary Grace Natividad
Sonora Poe." Although necessary notations were made
by OCR-Iloilo on petitioner's foundling certificate
reflecting the court decreed adoption,2 the petitioner's
adoptive mother discovered only sometime in the
second half of 2005 that the lawyer who handled
petitioner's adoption failed to secure from the OCR-
Iloilo a new Certificate of Live Birth indicating
petitioner's new name and the name of her adoptive
parents. 3 Without delay, petitioner's mother executed
an affidavit attesting to the lawyer's omission which
she submitted to the OCR-Iloilo. On 4 May 2006, OCR-
Iloilo issued a new Certificate of Live Birth in the name
of Mary Grace Natividad Sonora Poe.4
Having reached the age of eighteen (18) years in 1986,
petitioner registered as a voter with the local
COMELEC Office in San Juan City. On 13 December
1986, she received her COMELEC Voter's Identification
Card for Precinct No. 196 in Greenhills, San Juan,
Metro Manila.5
On 4 April 1988, petitioner applied for and was issued
Philippine Passport No. F9272876 by the Department
of Foreign Affairs (DFA). Subsequently, on 5 April
1993 and 19 May 1998, she renewed her Philippine
passport and respectively secured Philippine Passport
Nos. L881511 and DD156616.7
Initially, the petitioner enrolled and pursued a degree
in Development Studies at the University of the
Philippines8 but she opted to continue her studies
abroad and left for the United States of America (U.S.)
in 1988. Petitioner graduated in 1991 from Boston
College in Chestnuts Hill, Massachusetts where she
earned her Bachelor of Arts degree in Political
Studies.9
On 27 July 1991, petitioner married Teodoro Misael
Daniel V. Llamanzares (Llamanzares), a citizen of both
the Philippines and the U.S., at Sanctuario de San Jose
Parish in San Juan City. 10 Desirous of being with her
husband who was then based in the U.S., the couple
flew back to the U.S. two days after the wedding
ceremony or on 29 July 1991. 11
While in the U.S., the petitioner gave birth to her eldest
child Brian Daniel (Brian) on 16 April 1992.12 Her two
daughters Hanna MacKenzie (Hanna) and Jesusa Anika
(Anika) were both born in the Philippines on 10 July
1998 and 5 June 2004, respectively. 13
On 18 October 2001, petitioner became a naturalized
American citizen. 14 She obtained U.S. Passport No.
017037793 on 19 December 2001. 15
On 8 April 2004, the petitioner came back to the
Philippines together with Hanna to support her
father's candidacy for President in the May 2004
elections. It was during this time that she gave birth to
her youngest daughter Anika. She returned to the U.S.
with her two daughters on 8 July 2004. 16
After a few months, specifically on 13 December 2004,
petitioner rushed back to the Philippines upon
learning of her father's deteriorating medical
condition. 17 Her father slipped into a coma and
eventually expired. The petitioner stayed in the
country until 3 February 2005 to take care of her
father's funeral arrangements as well as to assist in
the settlement of his estate.18
According to the petitioner, the untimely demise of her
father was a severe blow to her entire family. In her
earnest desire to be with her grieving mother, the
petitioner and her husband decided to move and
reside permanently in the Philippines sometime in the
first quarter of 2005.19 The couple began preparing for
their resettlement including notification of their
children's schools that they will be transferring to
Philippine schools for the next
semester;20coordination with property movers for the
relocation of their household goods, furniture and cars
from the U.S. to the Philippines;21 and inquiry with
Philippine authorities as to the proper procedure to be
followed in bringing their pet dog into the
country.22 As early as 2004, the petitioner already quit
her job in the U.S.23
Finally, petitioner came home to the Philippines on 24
May 200524 and without delay, secured a Tax
Identification Number from the Bureau of Internal
Revenue. Her three (3) children immediately
followed25 while her husband was forced to stay in the
U.S. to complete pending projects as well as to arrange
the sale of their family home there.26
The petitioner and her children briefly stayed at her
mother's place until she and her husband purchased a
condominium unit with a parking slot at One Wilson
Place Condominium in San Juan City in the second half
of 2005.27 The corresponding Condominium
Certificates of Title covering the unit and parking slot
were issued by the Register of Deeds of San Juan City
to petitioner and her husband on 20 February
2006.28 Meanwhile, her children of school age began
attending Philippine private schools.
On 14 February 2006, the petitioner made a quick trip
to the U.S. to supervise the disposal of some of the
family's remaining household belongings.29 She
travelled back to the Philippines on 11 March 2006.30
In late March 2006, petitioner's husband officially
informed the U.S. Postal Service of the family's change
and abandonment of their address in the U.S.31 The
family home was eventually sold on 27 April
2006.32 Petitioner's husband resigned from his job in
the U.S. in April 2006, arrived in the country on 4 May
2006 and started working for a major Philippine
company in July 2006.33
In early 2006, petitioner and her husband acquired a
509-square meter lot in Corinthian Hills, Quezon City
where they built their family home34 and to this day, is
where the couple and their children have been
residing.35 A Transfer Certificate of Title covering said
property was issued in the couple's name by the
Register of Deeds of Quezon City on 1June 2006.
On 7 July 2006, petitioner took her Oath of Allegiance
to the Republic of the Philippines pursuant to Republic
Act (R.A.) No. 9225 or the Citizenship Retention and
Re-acquisition Act of 2003.36 Under the same Act, she
filed with the Bureau of Immigration (BI) a sworn
petition to reacquire Philippine citizenship together
with petitions for derivative citizenship on behalf of
104
her three minor children on 10 July 2006.37 As can be
gathered from its 18 July 2006 Order, the BI acted
favorably on petitioner's petitions and declared that
she is deemed to have reacquired her Philippine
citizenship while her children are considered as
citizens of the Philippines.38 Consequently, the BI
issued Identification Certificates (ICs) in petitioner's
name and in the names of her three (3) children. 39
Again, petitioner registered as a voter
of Barangay Santa Lucia, San Juan City on 31 August
2006.40 She also secured from the DFA a new
Philippine Passport bearing the No. XX4731999.41 This
passport was renewed on 18 March 2014 and she was
issued Philippine Passport No. EC0588861 by the
DFA.42
On 6 October 2010, President Benigno S. Aquino III
appointed petitioner as Chairperson of the Movie and
Television Review and Classification Board
(MTRCB).43 Before assuming her post, petitioner
executed an "Affidavit of Renunciation of Allegiance to
the United States of America and Renunciation of
American Citizenship" before a notary public in Pasig
City on 20 October 2010,44 in satisfaction of the legal
requisites stated in Section 5 of R.A. No. 9225.45 The
following day, 21 October 2010 petitioner submitted
the said affidavit to the BI46 and took her oath of office
as Chairperson of the MTRCB.47 From then on,
petitioner stopped using her American passport.48
On 12 July 2011, the petitioner executed before the
Vice Consul of the U.S. Embassy in Manila an
"Oath/Affirmation of Renunciation of Nationality of
the United States."49 On that day, she accomplished a
sworn questionnaire before the U.S. Vice Consul
wherein she stated that she had taken her oath as
MTRCB Chairperson on 21 October 2010 with the
intent, among others, of relinquishing her American
citizenship.50 In the same questionnaire, the petitioner
stated that she had resided outside of the U.S.,
specifically in the Philippines, from 3 September 1968
to 29 July 1991 and from May 2005 to present.51
On 9 December 2011, the U.S. Vice Consul issued to
petitioner a "Certificate of Loss of Nationality of the
United States" effective 21 October 2010.52
On 2 October 2012, the petitioner filed with the
COMELEC her Certificate of Candidacy (COC) for
Senator for the 2013 Elections wherein she answered
"6 years and 6 months" to the question "Period of
residence in the Philippines before May 13,
2013."53 Petitioner obtained the highest number of
votes and was proclaimed Senator on 16 May 2013. 54
On 19 December 2013, petitioner obtained Philippine
Diplomatic Passport No. DE0004530. 55
On 15 October 2015, petitioner filed her COC for the
Presidency for the May 2016 Elections. 56 In her COC,
the petitioner declared that she is a natural-born
citizen and that her residence in the Philippines up to
the day before 9 May 2016 would be ten (10) years
and eleven (11) months counted from 24 May
2005.57 The petitioner attached to her COC an
"Affidavit Affirming Renunciation of U.S.A. Citizenship"
subscribed and sworn to before a notary public in
Quezon City on 14 October 2015. 58
Petitioner's filing of her COC for President in the
upcoming elections triggered the filing of several
COMELEC cases against her which were the subject of
these consolidated cases.
Origin of Petition for Certiorari in G.R. No. 221697
A day after petitioner filed her COC for President,
Estrella Elamparo (Elamparo) filed a petition to deny
due course or cancel said COC which was docketed as
SPA No. 15-001 (DC) and raffled to the COMELEC
Second Division.59She is convinced that the COMELEC
has jurisdiction over her petition.60 Essentially,
Elamparo's contention is that petitioner committed
material misrepresentation when she stated in her
COC that she is a natural-born Filipino citizen and that
she is a resident of the Philippines for at least ten (10)
years and eleven (11) months up to the day before the
9 May 2016 Elections.61
On the issue of citizenship, Elamparo argued that
petitioner cannot be considered as a natural-born
Filipino on account of the fact that she was a
foundling.62 Elamparo claimed that international law
does not confer natural-born status and Filipino
citizenship on foundlings.63 Following this line of
reasoning, petitioner is not qualified to apply for
reacquisition of Filipino citizenship under R.A. No.
9225 for she is not a natural-born Filipino citizen to
begin with.64Even assuming arguendo that petitioner
was a natural-born Filipino, she is deemed to have lost
that status when she became a naturalized American
citizen.65 According to Elamparo, natural-born
citizenship must be continuous from birth.66
On the matter of petitioner's residency, Elamparo
pointed out that petitioner was bound by the sworn
declaration she made in her 2012 COC for Senator
wherein she indicated that she had resided in the
country for only six ( 6) years and six ( 6) months as of
May 2013 Elections. Elamparo likewise insisted that
assuming arguendo that petitioner is qualified to
regain her natural-born status under R.A. No. 9225,
she still fell short of the ten-year residency
requirement of the Constitution as her residence could
only be counted at the earliest from July 2006, when
she reacquired Philippine citizenship under the said
Act. Also on the assumption that petitioner is qualified
to reacquire lost Philippine Citizenship, Elamparo is of
the belief that she failed to reestablish her domicile in
the Philippines.67
Petitioner seasonably filed her Answer wherein she
countered that:
(1) the COMELEC did not have jurisdiction
over Elamparo's petition as it was actually a
petition for quo warranto which could only be
filed if Grace Poe wins in the Presidential
elections, and that the Department of Justice
(DOJ) has primary jurisdiction to revoke the
BI's July 18, 2006 Order;
(2) the petition failed to state a cause of action
because it did not contain allegations which, if
hypothetically admitted, would make false the
statement in her COC that she is a natural-
born Filipino citizen nor was there any
105
 allegation that there was a willful or
deliberate intent to misrepresent on her part;
(3) she did not make any material
misrepresentation in the COC regarding her
citizenship and residency qualifications for:
a. the 1934 Constitutional Convention
deliberations show that foundlings
were considered citizens;
b. foundlings are presumed under
international law to have been born
of citizens of the place where they are
found;
c. she reacquired her natural-born
Philippine citizenship under the
provisions of R.A. No. 9225;
d. she executed a sworn renunciation
of her American citizenship prior to
the filing of her COC for President in
the May 9, 2016 Elections and that
the same is in full force and effect and
has not been withdrawn or recanted;
e. the burden was on Elamparo in
proving that she did not possess
natural-born status;
f. residence is a matter of evidence
and that she reestablished her
domicile in the Philippines as early as
May 24, 2005;
g. she could reestablish residence
even before she reacquired natural-
born citizenship under R.A. No. 9225;
h. statement regarding the period of
residence in her 2012 COC for
Senator was an honest mistake, not
binding and should give way to
evidence on her true date of
reacquisition of domicile;
i. Elamparo's petition is merely an
action to usurp the sovereign right of
the Filipino people to decide a purely
political question, that is, should she
serve as the country's next leader.68
After the parties submitted their respective
Memoranda, the petition was deemed submitted for
resolution.
On 1 December 2015, the COMELEC Second Division
promulgated a Resolution finding that petitioner's
COC, filed for the purpose of running for the President
of the Republic of the Philippines in the 9 May 2016
National and Local Elections, contained material
representations which are false. The fallo of the
aforesaid Resolution reads:
WHEREFORE, in view of all the foregoing
considerations, the instant Petition to Deny Due
Course to or Cancel Certificate of Candidacy is
hereby GRANTED. Accordingly, the Certificate of
Candidacy for President of the Republic of the
Philippines in the May 9, 2016 National and Local
Elections filed by respondent Mary Grace Natividad
Sonora Poe Llamanzares is hereby CANCELLED.69
Motion for Reconsideration of the 1 December 2015
Resolution was filed by petitioner which the
COMELEC En Banc resolved in its 23 December 2015
Resolution by denying the same.70
Origin of Petition for Certiorari in G.R. Nos.
221698-700
This case stemmed from three (3) separate petitions
filed by Francisco S. Tatad (Tatad), Antonio P.
Contreras (Contreras) and Amado D. Valdez (Valdez)
against petitioner before the COMELEC which were
consolidated and raffled to its First Division.
In his petition to disqualify petitioner under Rule 25 of
the COMELEC Rules of Procedure,71 docketed as SPA
No. 15-002 (DC), Tatad alleged that petitioner lacks
the requisite residency and citizenship to qualify her
for the Presidency.72
Tatad theorized that since the Philippines adheres to
the principle of jus sanguinis, persons of unknown
parentage, particularly foundlings, cannot be
considered natural-born Filipino citizens since blood
relationship is determinative of natural-born
status.73 Tatad invoked the rule of statutory
construction that what is not included is excluded. He
averred that the fact that foundlings were not
expressly included in the categories of citizens in the
193 5 Constitution is indicative of the framers' intent
to exclude them.74 Therefore, the burden lies on
petitioner to prove that she is a natural-born citizen.75
Neither can petitioner seek refuge under international
conventions or treaties to support her claim that
foundlings have a nationality.76 According to Tatad,
international conventions and treaties are not self-
executory and that local legislations are necessary in
order to give effect to treaty obligations assumed by
the Philippines.77 He also stressed that there is no
standard state practice that automatically confers
natural-born status to foundlings.78
Similar to Elamparo's argument, Tatad claimed that
petitioner cannot avail of the option to reacquire
Philippine citizenship under R.A. No. 9225 because it
only applies to former natural-born citizens and
petitioner was not as she was a foundling.79
Referring to petitioner's COC for Senator, Tatad
concluded that she did not comply with the ten (10)
year residency requirement.80 Tatad opined that
petitioner acquired her domicile in Quezon City only
from the time she renounced her American citizenship
which was sometime in 2010 or 2011.81 Additionally,
Tatad questioned petitioner's lack of intention to
abandon her U.S. domicile as evinced by the fact that
her husband stayed thereat and her frequent trips to
the U.S.82
In support of his petition to deny due course or cancel
the COC of petitioner, docketed as SPA No. 15-139
106
(DC), Valdez alleged that her repatriation under R.A.
No. 9225 did not bestow upon her the status of a
natural-born citizen.83 He advanced the view that
former natural-born citizens who are repatriated
under the said Act reacquires only their Philippine
citizenship and will not revert to their original status
as natural-born citizens.84
He further argued that petitioner's own admission in
her COC for Senator that she had only been a resident
of the Philippines for at least six (6) years and six (6)
months prior to the 13 May 2013 Elections operates
against her. Valdez rejected petitioner's claim that she
could have validly reestablished her domicile in the
Philippines prior to her reacquisition of Philippine
citizenship. In effect, his position was that petitioner
did not meet the ten (10) year residency requirement
for President.
Unlike the previous COMELEC cases filed against
petitioner, Contreras' petition,85 docketed as SPA No.
15-007 (DC), limited the attack to the residency issue.
He claimed that petitioner's 2015 COC for President
should be cancelled on the ground that she did not
possess the ten-year period of residency required for
said candidacy and that she made false entry in her
COC when she stated that she is a legal resident of the
Philippines for ten (10) years and eleven (11) months
by 9 May 2016.86 Contreras contended that the
reckoning period for computing petitioner's residency
in the Philippines should be from 18 July 2006, the
date when her petition to reacquire Philippine
citizenship was approved by the BI.87 He asserted that
petitioner's physical presence in the country before 18
July 2006 could not be valid evidence of reacquisition
of her Philippine domicile since she was then living
here as an American citizen and as such, she was
governed by the Philippine immigration laws.88
In her defense, petitioner raised the following
arguments:
First, Tatad's petition should be dismissed outright for
failure to state a cause of action. His petition did not
invoke grounds proper for a disqualification case as
enumerated under Sections 12 and 68 of the Omnibus
Election Code.89 Instead, Tatad completely relied on
the alleged lack of residency and natural-born status
of petitioner which are not among the recognized
grounds for the disqualification of a candidate to an
elective office.90
Second, the petitions filed against her are basically
petitions for quo warranto as they focus on
establishing her ineligibility for the Presidency.91 A
petition for quo warranto falls within the exclusive
jurisdiction of the Presidential Electoral Tribunal
(PET) and not the COMELEC.92
Third, the burden to prove that she is not a natural-
born Filipino citizen is on the
respondents.93 Otherwise stated, she has a On 23 December 2015, the COMELEC En Banc issued a
presumption in her favor that she is a natural-born
citizen of this country.
Fourth, customary international law dictates that
foundlings are entitled to a nationality and are
presumed to be citizens of the country where they are
found.94 Consequently, the petitioner is considered as
a natural-born citizen of the Philippines.95
Fifth, she claimed that as a natural-born citizen, she
has every right to be repatriated under R.A. No. 9225
or the right to reacquire her natural-born
status.96 Moreover, the official acts of the Philippine
Government enjoy the presumption of regularity, to
wit: the issuance of the 18 July 2006 Order of the BI
declaring her as natural-born citizen, her appointment
as MTRCB Chair and the issuance of the decree of
adoption of San Juan RTC.97 She believed that all these
acts reinforced her position that she is a natural-born
citizen of the Philippines.98
Sixth, she maintained that as early as the first quarter
of 2005, she started reestablishing her domicile of
choice in the Philippines as demonstrated by her
children's resettlement and schooling in the country,
purchase of a condominium unit in San Juan City and
the construction of their family home in Corinthian
Hills.99
Seventh, she insisted that she could legally reestablish
her domicile of choice in the Philippines even before
she renounced her American citizenship as long as the
three determinants for a change of domicile are
complied with.100She reasoned out that there was no
requirement that renunciation of foreign citizenship is
a prerequisite for the acquisition of a new domicile of
choice.101
Eighth, she reiterated that the period appearing in the
residency portion of her COC for Senator was a
mistake made in good faith.102
In a Resolution103 promulgated on 11 December 2015,
the COMELEC First Division ruled that petitioner is not
a natural-born citizen, that she failed to complete the
ten (10) year residency requirement, and that she
committed material misrepresentation in her COC
when she declared therein that she has been a
resident of the Philippines for a period of ten (10)
years and eleven (11) months as of the day of the
elections on 9 May 2016. The COMELEC First Division
concluded that she is not qualified for the elective
position of President of the Republic of the
Philippines. The dispositive portion of said Resolution
reads:
WHEREFORE, premises considered, the
Commission RESOLVED, as it hereby RESOLVES,
to GRANT the Petitions and cancel the Certificate of
Candidacy of MARY GRACE NATIVIDAD SONORA
POE-LLAMANZARES for the elective position of
President of the Republic of the Philippines in
connection with the 9 May 2016 Synchronized Local
and National Elections.
Petitioner filed a motion for reconsideration seeking a
reversal of the COMELEC First Division's Resolution.
Resolution denying petitioner's motion for
reconsideration.
Alarmed by the adverse rulings of the COMELEC,
petitioner instituted the present petitions
for certiorari with urgent prayer for the issuance of
an ex parte temporary restraining order/status quo
107
ante order and/or writ of preliminary injunction. On
28 December 2015, temporary restraining orders
were issued by the Court enjoining the COMELEC and
its representatives from implementing the assailed
COMELEC Resolutions until further orders from the
Court. The Court also ordered the consolidation of the
two petitions filed by petitioner in its Resolution of 12
January 2016. Thereafter, oral arguments were held in
these cases.
The Court GRANTS the petition of Mary Grace
Natividad S. Poe-Llamanzares and to ANNUL and SET
ASIDE the:
1. Resolution dated 1 December 2015
rendered through its Second Division, in SPA
No. 15-001 (DC), entitled Estrella C. Elamparo,
petitioner, vs. Mary Grace Natividad Sonora
Poe-Llamanzares.
2. Resolution dated 11 December 2015,
rendered through its First Division, in the
consolidated cases SPA No. 15-002 (DC)
entitled Francisco S. Tatad, petitioner, vs. Mary
Grace Natividad Sonora Poe-Llamanzares,
respondent; SPA No. 15-007 (DC)
entitled Antonio P. Contreras, petitioner, vs.
Mary Grace Natividad Sonora Poe-
Llamanzares, respondent; and SPA No. 15-139
(DC) entitled Amado D. Valdez, petitioner, v.
Mary Grace Natividad Sonora Poe-
Llamanzares, respondent.
3. Resolution dated 23 December 2015 of the
Commission En Banc, upholding the 1
December 2015 Resolution of the Second
Division.
4. Resolution dated 23 December 2015 of the
Commission En Banc, upholding the 11
December 2015 Resolution of the First
Division.
The procedure and the conclusions from which the
questioned Resolutions emanated are tainted with
grave abuse of discretion amounting to lack of
jurisdiction. The petitioner is a QUALIFIED
CANDIDATE for President in the 9 May 2016 National
Elections.
The issue before the COMELEC is whether or not the
COC of petitioner should be denied due course or
cancelled "on the exclusive ground" that she made in
the certificate a false material representation. The
exclusivity of the ground should hedge in the
discretion of the COMELEC and restrain it from going
into the issue of the qualifications of the candidate for
the position, if, as in this case, such issue is yet
undecided or undetermined by the proper authority.
The COMELEC cannot itself, in the same cancellation
case, decide the qualification or lack thereof of the
candidate.
We rely, first of all, on the Constitution of our Republic,
particularly its provisions in Article IX, C, Section 2:
Section 2. The Commission on Elections shall exercise
the following powers and functions:
(1) Enforce and administer all laws
and regulations relative to the
conduct of an election, plebiscite,
initiative, referendum, and recall.
(2) Exercise exclusive original
jurisdiction over all contests relating
to the elections, returns, and
qualifications of all elective regional,
provincial, and city officials, and
appellate jurisdiction over all
contests involving elective municipal
officials decided by trial courts of
general jurisdiction, or involving
elective barangay officials decided by
trial courts of limited jurisdiction.
Decisions, final orders, or rulings of
the Commission on election contests
involving elective municipal and
barangay offices shall be final,
executory, and not appealable.
(3) Decide, except those involving the
right to vote, all questions affecting
elections, including determination of
the number and location of polling
places, appointment of election
officials and inspectors, and
registration of voters.
(4) Deputize, with the concurrence of
the President, law enforcement
agencies and instrumentalities of the
Government, including the Armed
Forces of the Philippines, for the
exclusive purpose of ensuring free,
orderly, honest, peaceful, and
credible elections.
(5) Register, after sufficient
publication, political parties,
organizations, or coalitions which, in
addition to other requirements, must
present their platform or program of
government; and accredit citizens'
arms of the Commission on Elections.
Religious denominations and sects
shall not be registered. Those which
seek to achieve their goals through
violence or unlawful means, or refuse
to uphold and adhere to this
Constitution, or which are supported
by any foreign government shall
likewise be refused registration.
Financial contributions from foreign
governments and their agencies to
political parties, organizations,
coalitions, or candidates related to
elections constitute interference in
national affairs, and, when accepted,
shall be an additional ground for the
cancellation of their registration with
the Commission, in addition to other
penalties that may be prescribed by
law.
108
 (6) File, upon a verified complaint, or
on its own initiative, petitions in
court for inclusion or exclusion of
voters; investigate and, where
appropriate, prosecute cases of
violations of election laws, including
acts or omissions constituting
election frauds, offenses, and
malpractices.
(7) Recommend to the Congress
effective measures to minimize
election spending, including
limitation of places where
propaganda materials shall be posted,
and to prevent and penalize all forms
of election frauds, offenses,
malpractices, and nuisance
candidacies.
(8) Recommend to the President the
removal of any officer or employee it
has deputized, or the imposition of
any other disciplinary action, for
violation or disregard of, or
disobedience to its directive, order, or
decision.
(9) Submit to the President and the
Congress a comprehensive report on
the conduct of each election,
plebiscite, initiative, referendum, or
recall.
Not any one of the enumerated powers approximate
the exactitude of the provisions of Article VI, Section
17 of the same basic law stating that:
The Senate and the House of Representatives
shall each have an Electoral Tribunal which
shall be the sole judge of all contests relating
to the election, returns, and qualifications of
their respective Members. Each Electoral
Tribunal shall be composed of nine Members,
three of whom shall be Justices of the
Supreme Court to be designated by the Chief
Justice, and the remaining six shall be
Members of the Senate or the House of
Representatives, as the case may be, who shall
be chosen on the basis of proportional
representation from the political parties and
the parties or organizations registered under
the party-list system represented therein. The
senior Justice in the Electoral Tribunal shall
be its Chairman.
or of the last paragraph of Article VII, Section 4 which
provides that:
The Supreme Court, sitting en banc, shall be
the sole judge of all contests relating to the
election, returns, and qualifications of the
President or Vice-President, and may
promulgate its rules for the purpose.
The tribunals which have jurisdiction over the
question of the qualifications of the President, the
Vice-President, Senators and the Members of the
House of Representatives was made clear by the
Constitution. There is no such provision for candidates
for these positions.
Can the COMELEC be such judge?
The opinion of Justice Vicente V. Mendoza
in Romualdez-Marcos v. Commission on
Elections,104 which was affirmatively cited in the En
Banc decision in Fermin v. COMELEC105 is our guide.
The citation in Fermin reads:
Apparently realizing the lack of an authorized
proceeding for declaring the ineligibility of candidates,
the COMELEC amended its rules on February 15, 1993
so as to provide in Rule 25 § 1, the following:
Grounds for disqualification. - Any
candidate who does not possess all
the qualifications of a candidate as
provided for by the Constitution or by
existing law or who commits any act
declared by law to be grounds for
disqualification may be disqualified
from continuing as a candidate.
The lack of provision for declaring the ineligibility of
candidates, however, cannot be supplied by a mere
rule. Such an act is equivalent to the creation of a
cause of action which is a substantive matter which
the COMELEC, in the exercise of its rule-making power
under Art. IX, A, §6 of the Constitution, cannot do it. It
is noteworthy that the Constitution withholds from
the COMELEC even the power to decide cases
involving the right to vote, which essentially involves
an inquiry into qualifications based on age,
residence and citizenship of voters. [Art. IX, C, §2(3)]
The assimilation in Rule 25 of the COMELEC rules of
grounds for ineligibility into grounds for
disqualification is contrary to the evident intention of
the law. For not only in their grounds but also in their
consequences are proceedings for "disqualification"
different from those for a declaration of "ineligibility."
"Disqualification" proceedings, as already stated, are
based on grounds specified in § 12 and §68 of the
Omnibus Election Code and in §40 of the Local
Government Code and are for the purpose of barring
an individual from becoming a candidate or from
continuing as a candidate for public office. In a word,
their purpose is to eliminate a candidate from the
race either from the start or during its progress.
"Ineligibility," on the other hand, refers to the lack of
the qualifications prescribed in the Constitution or the
statutes for holding public office and the purpose of the
proceedings for declaration of ineligibility is to remove
the incumbent from office.
Consequently, that an individual possesses the
qualifications for a public office does not imply that he
is not disqualified from becoming a candidate or
continuing as a candidate for a public office and vice
versa. We have this sort of dichotomy in our
Naturalization Law. (C.A. No. 473) That an alien has
the qualifications prescribed in §2 of the Law does not
imply that he does not suffer from any of [the]
disqualifications provided in §4.
Before we get derailed by the distinction as to grounds
and the consequences of the respective proceedings,
109
the importance of the opinion is in its statement that
"the lack of provision for declaring the ineligibility of
candidates, however, cannot be supplied by a mere
rule". Justice Mendoza lectured in Romualdez-
Marcos that:
Three reasons may be cited to explain the absence of
an authorized proceeding for determining before
election the qualifications of a candidate.
First is the fact that unless a candidate wins and is
proclaimed elected, there is no necessity for
determining his eligibility for the office. In contrast,
whether an individual should be disqualified as a
candidate for acts constituting election
offenses (e.g., vote buying, over spending, commission
of prohibited acts) is a prejudicial question which
should be determined lest he wins because of the very
acts for which his disqualification is being sought. That
is why it is provided that if the grounds for
disqualification are established, a candidate will not be
voted for; if he has been voted for, the votes in his
favor will not be counted; and if for some reason he
has been voted for and he has won, either he will not
be proclaimed or his proclamation will be set aside.
Second is the fact that the determination of a
candidates' eligibility, e.g., his citizenship or, as in this
case, his domicile, may take a long time to make,
extending beyond the beginning of the term of the
office. This is amply demonstrated in the companion
case (G.R. No. 120265, Agapito A. Aquino v. COMELEC)
where the determination of Aquino's residence was still
pending in the COMELEC even after the elections of May
8, 1995. This is contrary to the summary character
proceedings relating to certificates of candidacy. That is
why the law makes the receipt of certificates of
candidacy a ministerial duty of the COMELEC and its
officers. The law is satisfied if candidates state in their
certificates of candidacy that they are eligible for the
position which they seek to fill, leaving the
determination of their qualifications to be made after
the election and only in the event they are elected.
Only in cases involving charges of false
representations made in certificates of candidacy is
the COMELEC given jurisdiction.
Third is the policy underlying the prohibition against
pre-proclamation cases in elections for President, Vice
President, Senators and members of the House of
Representatives. (R.A. No. 7166, § 15) The purpose is
to preserve the prerogatives of the House of
Representatives Electoral Tribunal and the other
Tribunals as "sole judges" under the Constitution of
the election, returns and qualifications of members of
Congress of the President and Vice President, as the
case may be.106
To be sure, the authoritativeness of
the Romualdez pronouncements as reiterated
in Fermin, led to the amendment through COMELEC
Resolution No. 9523, on 25 September 2012 of its Rule
25. This, the 15 February1993 version of Rule 25,
which states that:
Grounds for disqualification. -Any candidate who does
not possess all the qualifications of a candidate as
provided for by the Constitution or by existing law or
who commits any act declared by law to be grounds
for disqualification may be disqualified from
continuing as a candidate.107
was in the 2012 rendition, drastically changed to:
Grounds. - Any candidate who, in action or protest in
which he is a party, is declared by final decision of a
competent court, guilty of, or found by the
Commission to be suffering from any disqualification
provided by law or the Constitution.
A Petition to Disqualify a Candidate invoking grounds
for a Petition to Deny to or Cancel a Certificate of
Candidacy or Petition to Declare a Candidate as a
Nuisance Candidate, or a combination thereof, shall be
summarily dismissed.
Clearly, the amendment done in 2012 is an acceptance
of the reality of absence of an authorized proceeding
for determining before election the qualifications of
candidate. Such that, as presently required, to
disqualify a candidate there must be a declaration by a
final judgment of a competent court that the candidate
sought to be disqualified "is guilty of or found by the
Commission to be suffering from any disqualification
provided by law or the Constitution."
Insofar as the qualification of a candidate is concerned,
Rule 25 and Rule 23 are flipsides of one to the other.
Both do not allow, are not authorizations, are not
vestment of jurisdiction, for the COMELEC to
determine the qualification of a candidate. The facts of
qualification must beforehand be established in a prior
proceeding before an authority properly vested with
jurisdiction. The prior determination of qualification
may be by statute, by executive order or by a judgment
of a competent court or tribunal.
If a candidate cannot be disqualified without a prior
finding that he or she is suffering from a
disqualification "provided by law or the Constitution,"
neither can the certificate of candidacy be cancelled or
denied due course on grounds of false representations
regarding his or her qualifications, without a prior
authoritative finding that he or she is not qualified,
such prior authority being the necessary measure by
which the falsity of the representation can be found.
The only exception that can be conceded are self-
evident facts of unquestioned or unquestionable
veracity and judicial confessions. Such are, anyway,
bases equivalent to prior decisions against which the
falsity of representation can be determined.
The need for a predicate finding or final
pronouncement in a proceeding under Rule 23 that
deals with, as in this case, alleged false representations
regarding the candidate's citizenship and residence,
forced the COMELEC to rule essentially that since
foundlings108 are not mentioned in the enumeration of
citizens under the 1935 Constitution,109 they then
cannot be citizens. As the COMELEC stated in oral
arguments, when petitioner admitted that she is a
foundling, she said it all. This borders on bigotry.
Oddly, in an effort at tolerance, the COMELEC, after
saying that it cannot rule that herein petitioner
possesses blood relationship with a Filipino citizen
when "it is certain that such relationship is
indemonstrable," proceeded to say that "she now has
110
the burden to present evidence to prove her natural
filiation with a Filipino parent."
The fact is that petitioner's blood relationship with a
Filipino citizen is DEMONSTRABLE.
At the outset, it must be noted that presumptions
regarding paternity is neither unknown nor
unaccepted in Philippine Law. The Family Code of the
Philippines has a whole chapter on Paternity and
Filiation.110 That said, there is more than sufficient
evider1ce that petitioner has Filipino parents and is
therefore a natural-born Filipino. Parenthetically, the
burden of proof was on private respondents to show
that petitioner is not a Filipino citizen. The private
respondents should have shown that both of
petitioner's parents were aliens. Her admission that
she is a foundling did not shift the burden to her
because such status did not exclude the possibility that
her parents were Filipinos, especially as in this case
where there is a high probability, if not certainty, that
her parents are Filipinos.
The factual issue is not who the parents of petitioner
are, as their identities are unknown, but whether such
parents are Filipinos. Under Section 4, Rule 128:
Sect. 4. Relevancy, collateral matters - Evidence must
have such a relation to the fact in issue as to induce
belief in its existence or no-existence. Evidence on
collateral matters shall not be allowed, except when it
tends in any reasonable degree to establish the
probability of improbability of the fact in issue.
The Solicitor General offered official statistics from the
Philippine Statistics Authority (PSA)111 that from 1965
to 1975, the total number of foreigners born in the
Philippines was 15,986 while the total number of
Filipinos born in the country was 10,558,278. The
statistical probability that any child born in the
Philippines in that decade is natural-born Filipino
was 99.83%. For her part, petitioner presented
census statistics for Iloilo Province for 1960 and 1970,
also from the PSA. In 1960, there were 962,532
Filipinos and 4,734 foreigners in the
province; 99.62% of the population were Filipinos. In
1970, the figures were 1,162,669 Filipinos and 5,304
foreigners, or 99.55%. Also presented were figures
for the child producing ages (15-49). In 1960, there
were 230,528 female Filipinos as against 730 female
foreigners or 99.68%. In the same year, there were
210,349 Filipino males and 886 male aliens,
or 99.58%. In 1970, there were 270,299 Filipino
females versus 1, 190 female aliens, or 99.56%. That
same year, there were 245,740 Filipino males as
against only 1,165 male aliens or 99.53%. COMELEC
did not dispute these figures. Notably, Commissioner
Arthur Lim admitted, during the oral arguments, that
at the time petitioner was found in 1968, the majority
of the population in Iloilo was Filipino.112
Other circumstantial evidence of the nationality of
petitioner's parents are the fact that she was
abandoned as an infant in a Roman Catholic Church in
Iloilo City.1âwphi1 She also has typical Filipino
features: height, flat nasal bridge, straight black hair,
almond shaped eyes and an oval face.
There is a disputable presumption that things have
happened according to the ordinary course of nature
and the ordinary habits of life.113 All of the foregoing
evidence, that a person with typical Filipino features is
abandoned in Catholic Church in a municipality where
the population of the Philippines is overwhelmingly
Filipinos such that there would be more than a 99%
chance that a child born in the province would be a
Filipino, would indicate more than ample probability if
not statistical certainty, that petitioner's parents are
Filipinos. That probability and the evidence on which
it is based are admissible under Rule 128, Section 4 of
the Revised Rules on Evidence.
To assume otherwise is to accept the absurd, if not the
virtually impossible, as the norm. In the words of the
Solicitor General:
Second. It is contrary to common sense because
foreigners do not come to the Philippines so they can
get pregnant and leave their newborn babies behind.
We do not face a situation where the probability is
such that every foundling would have a 50% chance of
being a Filipino and a 50% chance of being a foreigner.
We need to frame our questions properly. What are
the chances that the parents of anyone born in the
Philippines would be foreigners? Almost zero. What
are the chances that the parents of anyone born in the
Philippines would be Filipinos? 99.9%.
According to the Philippine Statistics Authority, from
2010 to 2014, on a yearly average, there were
1,766,046 children born in the Philippines to Filipino
parents, as opposed to 1,301 children in the
Philippines of foreign parents. Thus, for that sample
period, the ratio of non-Filipino children to natural
born Filipino children is 1:1357. This means that the
statistical probability that any child born in the
Philippines would be a natural born Filipino is
99.93%.
From 1965 to 1975, the total number of foreigners
born in the Philippines is 15,986 while the total
number of Filipinos born in the Philippines is
15,558,278. For this period, the ratio of non-Filipino
children is 1:661. This means that the statistical
probability that any child born in the Philippines on
that decade would be a natural born Filipino is
99.83%.
We can invite statisticians and social anthropologists
to crunch the numbers for us, but I am confident that
the statistical probability that a child born in the
Philippines would be a natural born Filipino will not
be affected by whether or not the parents are known.
If at all, the likelihood that a foundling would have a
Filipino parent might even be higher than 99.9%.
Filipinos abandon their children out of poverty or
perhaps, shame. We do not imagine foreigners
abandoning their children here in the Philippines
thinking those infants would have better economic
opportunities or believing that this country is a
tropical paradise suitable for raising abandoned
children. I certainly doubt whether a foreign couple
has ever considered their child excess baggage that is
best left behind.
To deny full Filipino citizenship to all foundlings and
render them stateless just because there may be a
111
theoretical chance that one among the thousands of
these foundlings might be the child of not just one, but
two, foreigners is downright discriminatory, irrational,
and unjust. It just doesn't make any sense. Given the
statistical certainty - 99.9% - that any child born in the
Philippines would be a natural born citizen, a decision
denying foundlings such status is effectively a denial of
their birthright. There is no reason why this
Honorable Court should use an improbable
hypothetical to sacrifice the fundamental political
rights of an entire class of human beings. Your Honor,
constitutional interpretation and the use of common
sense are not separate disciplines.
As a matter of law, foundlings are as a class, natural-
born citizens. While the 1935 Constitution's
enumeration is silent as to foundlings, there is no
restrictive language which would definitely exclude
foundlings either. Because of silence and ambiguity in
the enumeration with respect to foundlings, there is a
need to examine the intent of the framers. In Nitafan v.
Commissioner of Internal Revenue,114 this Court held
that:
The ascertainment of that intent is but in
keeping with the fundamental principle of
constitutional construction that the intent of
the framers of the organic law and of the
people adopting it should be given effect. The
primary task in constitutional construction is
to ascertain and thereafter assure the
realization of the purpose of the framers and
of the people in the adoption of the
Constitution. It may also be safely assumed
that the people in ratifying the Constitution
were guided mainly by the explanation
offered by the framers.115
As pointed out by petitioner as well as the Solicitor
General, the deliberations of the 1934 Constitutional
Convention show that the framers intended foundlings
to be covered by the enumeration. The following
exchange is recorded:
Sr. Rafols: For an amendment. I propose that after
subsection 2, the following is inserted: "The natural
children of a foreign father and a Filipino mother not
recognized by the father.
xxxx
President:
[We] would like to request a clarification from the
proponent of the amendment. The gentleman refers to
natural children or to any kind of illegitimate children?
Sr. Rafols:
To all kinds of illegitimate children. It also includes
natural children of unknown parentage, natural or
illegitimate children of unknown parents.
Sr. Montinola:
For clarification. The gentleman said "of unknown
parents." Current codes consider them Filipino, that is,
I refer to the Spanish Code wherein all children of
unknown parentage born in Spanish territory are
considered Spaniards, because the presumption is that
a child of unknown parentage is the son of a Spaniard.
This may be applied in the Philippines in that a child of
unknown parentage born in the Philippines is deemed
to be Filipino, and there is no need ...
Sr. Rafols:
There is a need, because we are relating the conditions
that are [required] to be Filipino.
Sr. Montinola:
But that is the interpretation of the law, therefore,
there is no [more] need for amendment.
Sr. Rafols:
The amendment should read thus:
"Natural or illegitimate of a foreign father and a
Filipino mother recognized by one, or the children of
unknown parentage."
Sr. Briones:
The amendment [should] mean children born in the
Philippines of unknown parentage.
Sr. Rafols:
The son of a Filipina to a Foreigner, although this
[person] does not recognize the child, is not unknown.
President:
Does the gentleman accept the amendment or not?
Sr. Rafols:
I do not accept the amendment because the
amendment would exclude the children of a Filipina
with a foreigner who does not recognize the child.
Their parentage is not unknown and I think those of
overseas Filipino mother and father [whom the latter]
does not recognize, should also be considered as
Filipinos.
President:
The question in order is the amendment to the
amendment from the Gentleman from Cebu, Mr.
Briones.
Sr. Busion:
Mr. President, don't you think it would be better to
leave this matter in the hands of the Legislature?
Sr. Roxas:
Mr. President, my humble opinion is that these cases
are few and far in between, that the constitution need
[not] refer to them. By international law the principle
that children or people born in a country of unknown
parents are citizens in this nation is recognized, and it is
not necessary to include a provision on the subject
exhaustively.116
Though the Rafols amendment was not carried out, it
was not because there was any objection to the notion
that persons of "unknown parentage" are not citizens
but only because their number was not enough to
merit specific mention. Such was the account,117 cited
by petitioner, of delegate and constitution law author
Jose Aruego who said:
During the debates on this provision, Delegate
Rafols presented an amendment to include as
Filipino citizens the illegitimate children with
a foreign father of a mother who was a citizen
of the Philippines, and also foundlings; but
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 this amendment was defeated primarily
because the Convention believed that the
cases, being too few to warrant the inclusion
of a provision in the Constitution to apply to
them, should be governed by statutory
legislation. Moreover, it was believed that the
rules of international law were already clear
to the effect that illegitimate children followed
the citizenship of the mother, and
that foundlings followed the nationality of the
place where they were found, thereby making
unnecessary the inclusion in the Constitution
of the proposed amendment.
This explanation was likewise the position of the
Solicitor General during the 16 February 2016 Oral
Arguments:
We all know that the Rafols proposal was rejected. But
note that what was declined was the proposal for a
textual and explicit recognition of foundlings as
Filipinos. And so, the way to explain the constitutional
silence is by saying that it was the view of Montinola
and Roxas which prevailed that there is no more need
to expressly declare foundlings as Filipinos.
Obviously, it doesn't matter whether Montinola's or
Roxas' views were legally correct. Framers of a
constitution can constitutionalize rules based on
assumptions that are imperfect or even wrong. They
can even overturn existing rules. This is basic. What
matters here is that Montinola and Roxas were able to
convince their colleagues in the convention that there
is no more need to expressly declare foundlings as
Filipinos because they are already impliedly so
recognized.
In other words, the constitutional silence is fully
explained in terms of linguistic efficiency and the
avoidance of redundancy. The policy is clear: it is to
recognize foundlings, as a class, as Filipinos under Art.
IV, Section 1 (3) of the 1935 Constitution. This
inclusive policy is carried over into the 1973 and 1987
Constitution. It is appropriate to invoke a famous
scholar as he was paraphrased by Chief Justice
Fernando: the constitution is not silently silent, it is
silently vocal. 118
The Solicitor General makes the further point that the
framers "worked to create a just and humane society,"
that "they were reasonable patriots and that it would
be unfair to impute upon them a discriminatory intent
against foundlings." He exhorts that, given the grave
implications of the argument that foundlings are not
natural-born Filipinos, the Court must search the
records of the 1935, 1973 and 1987 Constitutions "for
an express intention to deny foundlings the status of
Filipinos. The burden is on those who wish to use the
constitution to discriminate against foundlings to
show that the constitution really intended to take this
path to the dark side and inflict this across the board
marginalization."
We find no such intent or language permitting
discrimination against foundlings. On the contrary, all
three Constitutions guarantee the basic right to equal
protection of the laws. All exhort the State to render
social justice. Of special consideration are several
provisions in the present charter: Article II, Section 11
which provides that the "State values the dignity of
every human person and guarantees full respect for
human rights," Article XIII, Section 1 which mandates
Congress to "give highest priority to the enactment of
measures that protect and enhance the right of all the
people to human dignity, reduce social, economic, and
political inequalities x x x" and Article XV, Section 3
which requires the State to defend the "right of
children to assistance, including proper care and
nutrition, and special protection from all forms of
neglect, abuse, cruelty, exploitation, and other
conditions prejudicial to their development."
Certainly, these provisions contradict an intent to
discriminate against foundlings on account of their
unfortunate status.
Domestic laws on adoption also support the principle
that foundlings are Filipinos. These laws do not
provide that adoption confers citizenship upon the
adoptee. Rather, the adoptee must be a Filipino in the
first place to be adopted. The most basic of such laws
is Article 15 of the Civil Code which provides that
"[l]aws relating to family rights, duties, status,
conditions, legal capacity of persons are binding on
citizens of the Philippines even though living abroad."
Adoption deals with status, and a Philippine adoption
court will have jurisdiction only if the adoptee is a
Filipino. In Ellis and Ellis v. Republic,119 a child left by
an unidentified mother was sought to be adopted by
aliens. This Court said:
In this connection, it should be noted that this is a
proceedings in rem, which no court may entertain
unless it has jurisdiction, not only over the subject
matter of the case and over the parties, but also over
the res, which is the personal status of Baby Rose as
well as that of petitioners herein. Our Civil Code (Art.
15) adheres to the theory that jurisdiction over the
status of a natural person is determined by the latter's
nationality. Pursuant to this theory, we
have jurisdiction over the status of Baby Rose, she
being a citizen of the Philippines, but not over the
status of the petitioners, who are
foreigners.120 (Underlining supplied)
Recent legislation is more direct. R.A. No. 8043
entitled "An Act Establishing the Rules to Govern the
Inter-Country Adoption of Filipino Children and For
Other Purposes" (otherwise known as the "Inter-
Country Adoption Act of 1995"), R.A. No. 8552,
entitled "An Act Establishing the Rules and Policies on
the Adoption of Filipino Children and For Other
Purposes" (otherwise known as the Domestic
Adoption Act of 1998) and this Court's A.M. No. 02-6-
02-SC or the "Rule on Adoption," all expressly refer to
"Filipino children" and include foundlings as among
Filipino children who may be adopted.
It has been argued that the process to determine that
the child is a foundling leading to the issuance of a
foundling certificate under these laws and the
issuance of said certificate are acts to acquire or
perfect Philippine citizenship which make the
foundling a naturalized Filipino at best. This is
erroneous. Under Article IV, Section 2 "Natural-born
citizens are those who are citizens of the Philippines
from birth without having to perform any act to
acquire or perfect their Philippine citizenship." In the
first place, "having to perform an act" means that the
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act must be personally done by the citizen. In this
instance, the determination of foundling status is done
not by the child but by the authorities.121 Secondly, the
object of the process is the determination of the
whereabouts of the parents, not the citizenship of the
child. Lastly, the process is certainly not analogous to
naturalization proceedings to acquire Philippine
citizenship, or the election of such citizenship by one
born of an alien father and a Filipino mother under the
1935 Constitution, which is an act to perfect it.
In this instance, such issue is moot because there is no
dispute that petitioner is a foundling, as evidenced by
a Foundling Certificate issued in her favor.122 The
Decree of Adoption issued on 13 May 1974, which
approved petitioner's adoption by Jesusa Sonora Poe
and Ronald Allan Kelley Poe, expressly refers to
Emiliano and his wife, Rosario Militar, as her
"foundling parents," hence effectively affirming
petitioner's status as a foundling.123
Foundlings are likewise citizens under international
law. Under the 1987 Constitution, an international law
can become part of the sphere of domestic law either
by transformation or incorporation. The
transformation method requires that an international
law be transformed into a domestic law through a
constitutional mechanism such as local
legislation.124 On the other hand, generally accepted
principles of international law, by virtue of the
incorporation clause of the Constitution, form part of
the laws of the land even if they do not derive from
treaty obligations. Generally accepted principles of
international law include international custom as
evidence of a general practice accepted as law, and
general principles of law recognized by civilized
nations.125 International customary rules are accepted
as binding as a result from the combination of two
elements: the established, widespread, and consistent
practice on the part of States; and a psychological
element known as the opinionjuris sive
necessitates (opinion as to law or necessity). Implicit in
the latter element is a belief that the practice in
question is rendered obligatory by the existence of a
rule of law requiring it.126 "General principles of law
recognized by civilized nations" are principles
"established by a process of reasoning" or judicial
logic, based on principles which are "basic to legal
systems generally,"127 such as "general principles of
equity, i.e., the general principles of fairness and
justice," and the "general principle against
discrimination" which is embodied in the "Universal
Declaration of Human Rights, the International
Covenant on Economic, Social and Cultural Rights, the
International Convention on the Elimination of All
Forms of Racial Discrimination, the Convention
Against Discrimination in Education, the Convention
(No. 111) Concerning Discrimination in Respect of
Employment and Occupation."128 These are the same
core principles which underlie the Philippine
Constitution itself, as embodied in the due process and
equal protection clauses of the Bill of Rights.129
Universal Declaration of Human Rights ("UDHR") has
been interpreted by this Court as part of the generally
accepted principles of international law and binding
on the State.130 Article 15 thereof states:
1. Everyone has the right to a nationality.
2. No one shall be arbitrarily deprived of his
nationality nor denied the right to change his
nationality.
The Philippines has also ratified the UN Convention on
the Rights of the Child (UNCRC). Article 7 of the
UNCRC imposes the following obligations on our
country:
Article 7
1. The child shall be registered immediately after birth
and shall have the right from birth to a name, the right
to acquire a nationality and as far as possible, the right
to know and be cared for by his or her parents.
2. States Parties shall ensure the implementation of
these rights in accordance with their national law and
their obligations under the relevant international
instruments in this field, in particular where the child
would otherwise be stateless.
In 1986, the country also ratified the 1966
International Covenant on Civil and Political Rights
(ICCPR). Article 24 thereof provide for the right
of every child "to acquire a nationality:"
Article 24
1. Every child shall have, without any discrimination
as to race, colour, sex, language, religion, national or
social origin, property or birth, the right, to such
measures of protection as are required by his status as
a minor, on the part of his family, society and the State.
2. Every child shall be registered immediately after
birth and shall have a name.
3. Every child has the right to acquire a nationality.
The common thread of the UDHR, UNCRC and ICCPR is
to obligate the Philippines to grant nationality from
birth and ensure that no child is stateless. This grant of
nationality must be at the time of birth, and it cannot
be accomplished by the application of our present
naturalization laws, Commonwealth Act No. 473, as
amended, and R.A. No. 9139, both of which require the
applicant to be at least eighteen (18) years old.
The principles found in two conventions, while yet
unratified by the Philippines, are generally accepted
principles of international law. The first is Article 14 of
the 1930 Hague Convention on Certain Questions
Relating to the Conflict of Nationality Laws under
which a foundling is presumed to have the "nationality
of the country of birth," to wit:
Article 14
A child whose parents are both unknown shall have
the nationality of the country of birth. If the child's
parentage is established, its nationality shall be
determined by the rules applicable in cases where the
parentage is known.
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A foundling is, until the contrary is proved, presumed
to have been born on the territory of the State in
which it was found. (Underlining supplied)
The second is the principle that a foundling
is presumed born of citizens of the country where he is
found, contained in Article 2 of the 1961 United
Nations Convention on the Reduction of Statelessness:
Article 2
A foundling found in the territory of a Contracting
State shall, in the absence of proof to the contrary, be
considered to have been born within the territory of
parents possessing the nationality of that State.
That the Philippines is not a party to the 1930 Hague
Convention nor to the 1961 Convention on the
Reduction of Statelessness does not mean that their
principles are not binding. While the Philippines is not
a party to the 1930 Hague Convention, it is a signatory
to the Universal Declaration on Human Rights, Article
15(1) ofwhich131effectively affirms Article 14 of the
1930 Hague Convention. Article 2 of the 1961 "United
Nations Convention on the Reduction of Statelessness"
merely "gives effect" to Article 15(1) of the
UDHR.132 In Razon v. Tagitis, 133 this Court noted that
the Philippines had not signed or ratified the
"International Convention for the Protection of All
Persons from Enforced Disappearance." Yet, we ruled
that the proscription against enforced disappearances
in the said convention was nonetheless binding as a
"generally accepted principle of international
law." Razon v. Tagitis is likewise notable for declaring
the ban as a generally accepted principle of
international law although the convention had been
ratified by only sixteen states and had not even come
into force and which needed the ratification of a
minimum of twenty states. Additionally, as petitioner
points out, the Court was content with the practice of
international and regional state organs, regional state
practice in Latin America, and State Practice in the
United States.
Another case where the number of ratifying countries
was not determinative is Mijares v. Ranada, 134 where
only four countries had "either ratified or acceded
to"135 the 1966 "Convention on the Recognition and
Enforcement of Foreign Judgments in Civil and
Commercial Matters" when the case was decided in
2005. The Court also pointed out that that nine
member countries of the European Common Market
had acceded to the Judgments Convention. The Court
also cited U.S. laws and jurisprudence on recognition
of foreign judgments. In all, only the practices of
fourteen countries were considered and yet, there was
pronouncement that recognition of foreign judgments
was widespread practice.
Our approach in Razon and Mijares effectively takes
into account the fact that "generally accepted
principles of international law" are based not only on
international custom, but also on "general principles
of law recognized by civilized nations," as the phrase is
understood in Article 38.1 paragraph (c) of the ICJ
Statute. Justice, fairness, equity and the policy against
discrimination, which are fundamental principles
underlying the Bill of Rights and which are "basic to
legal systems generally,"136 support the notion that the
right against enforced disappearances and the
recognition of foreign judgments, were correctly
considered as "generally accepted principles of
international law" under the incorporation clause.
Petitioner's evidence137 shows that at least sixty
countries in Asia, North and South America, and
Europe have passed legislation recognizing foundlings
as its citizen. Forty-two (42) of those countries follow
the jus sanguinis regime. Of the sixty, only thirty-three
(33) are parties to the 1961 Convention on
Statelessness; twenty-six (26) are not signatories to
the Convention. Also, the Chief Justice, at the 2
February 2016 Oral Arguments pointed out that in
166 out of 189 countries surveyed (or 87.83%),
foundlings are recognized as citizens. These
circumstances, including the practice of jus
sanguinis countries, show that it is a generally
accepted principle of international law to presume
foundlings as having been born of nationals of the
country in which the foundling is found.
Current legislation reveals the adherence of the
Philippines to this generally accepted principle of
international law. In particular, R.A. No. 8552, R.A. No.
8042 and this Court's Rules on Adoption, expressly
refer to "Filipino children." In all of them, foundlings
are among the Filipino children who could be adopted.
Likewise, it has been pointed that the DFA issues
passports to foundlings. Passports are by law, issued
only to citizens. This shows that even the executive
department, acting through the DFA, considers
foundlings as Philippine citizens.
Adopting these legal principles from the 1930 Hague
Convention and the 1961 Convention on Statelessness
is rational and reasonable and consistent with the jus
sanguinis regime in our Constitution. The presumption
of natural-born citizenship of foundlings stems from
the presumption that their parents are nationals of the
Philippines. As the empirical data provided by the PSA
show, that presumption is at more than 99% and is a
virtual certainty.
In sum, all of the international law conventions and
instruments on the matter of nationality of foundlings
were designed to address the plight of a defenseless
class which suffers from a misfortune not of their own
making. We cannot be restrictive as to their
application if we are a country which calls itself
civilized and a member of the community of nations.
The Solicitor General's warning in his opening
statement is relevant:
.... the total effect of those documents is to signify to
this Honorable Court that those treaties and
conventions were drafted because the world
community is concerned that the situation of
foundlings renders them legally invisible. It would be
tragically ironic if this Honorable Court ended up
using the international instruments which seek to
protect and uplift foundlings a tool to deny them
political status or to accord them second-class
citizenship.138
The COMELEC also ruled139 that petitioner's
repatriation in July 2006 under the provisions of R.A.
No. 9225 did not result in the reacquisition of natural-
born citizenship. The COMELEC reasoned that since
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the applicant must perform an act, what is reacquired
is not "natural-born" citizenship but only plain
"Philippine citizenship."
The COMELEC's rule arrogantly disregards consistent
jurisprudence on the matter of repatriation statutes in
general and of R.A. No. 9225 in particular.
In the seminal case of Bengson Ill v.
HRET, 140 repatriation was explained as follows:
Moreover, repatriation results in the recovery of the
original nationality. This means that a naturalized
Filipino who lost his citizenship will be restored to his
prior status as a naturalized Filipino citizen. On the
other hand, if he was originally a natural-born citizen
before he lost his Philippine citizenship, he will be
restored to his former status as a natural-born
Filipino.
R.A. No. 9225 is a repatriation statute and has been
described as such in several cases. They
include Sobejana-Condon v. COMELEC141 where we
described it as an "abbreviated repatriation process
that restores one's Filipino citizenship x x x." Also
included is Parreno v. Commission on Audit,142 which
cited Tabasa v. Court of Appeals,143where we said that
"[t]he repatriation of the former Filipino will allow
him to recover his natural-born citizenship. Parreno v.
Commission on Audit144 is categorical that "if petitioner
reacquires his Filipino citizenship (under R.A. No.
9225), he will ... recover his natural-born citizenship."
The COMELEC construed the phrase "from birth" in
the definition of natural citizens as implying "that
natural-born citizenship must begin at birth and
remain uninterrupted and continuous from birth." R.A.
No. 9225 was obviously passed in line with Congress'
sole prerogative to determine how citizenship may be
lost or reacquired. Congress saw it fit to decree that
natural-born citizenship may be reacquired even if it
had been once lost. It is not for the COMELEC to
disagree with the Congress' determination.
More importantly, COMELEC's position that natural-
born status must be continuous was already rejected
in Bengson III v. HRET145 where the phrase "from
birth" was clarified to mean at the time of birth: "A
person who at the time of his birth, is a citizen of a
particular country, is a natural-born citizen thereof."
Neither is "repatriation" an act to "acquire or perfect"
one's citizenship. In Bengson III v. HRET, this Court
pointed out that there are only two types of citizens
under the 1987 Constitution: natural-born citizen and
naturalized, and that there is no third category for
repatriated citizens:
It is apparent from the enumeration of who are
citizens under the present Constitution that there are
only two classes of citizens: (1) those who are natural-
born and (2) those who are naturalized in accordance
with law. A citizen who is not a naturalized Filipino, ie.,
did not have to undergo the process of naturalization
to obtain Philippine citizenship, necessarily is a
natural-born Filipino. Noteworthy is the absence in
said enumeration of a separate category for persons
who, after losing Philippine citizenship, subsequently
reacquire it. The reason therefor is clear: as to such
persons, they would either be natural-born or
naturalized depending on the reasons for the loss of
their citizenship and the mode prescribed by the
applicable law for the reacquisition thereof. As
respondent Cruz was not required by law to go
through naturalization proceedings in order to
reacquire his citizenship, he is perforce a natural-born
Filipino. As such, he possessed all the necessary
qualifications to be elected as member of the House of
Representatives.146
The COMELEC cannot reverse a judicial precedent.
That is reserved to this Court. And while we may
always revisit a doctrine, a new rule reversing
standing doctrine cannot be retroactively applied.
In Morales v. Court of Appeals and Jejomar
Erwin S. Binay, Jr.,147 where we decreed reversed the
condonation doctrine, we cautioned that it "should be
prospective in application for the reason that judicial
decisions applying or interpreting the laws of the
Constitution, until reversed, shall form part of the legal
system of the Philippines." This Court also said that
"while the future may ultimately uncover a doctrine's
error, it should be, as a general rule, recognized as
good law prior to its abandonment. Consequently, the
people's reliance thereupon should be respected."148
Lastly, it was repeatedly pointed out during the oral
arguments that petitioner committed a falsehood
when she put in the spaces for "born to" in her
application for repatriation under R.A. No. 9225 the
names of her adoptive parents, and this misled the BI
to presume that she was a natural-born Filipino. It has
been contended that the data required were the names
of her biological parents which are precisely unknown.
This position disregards one important fact -
petitioner was legally adopted. One of the effects of
adoption is "to sever all legal ties between the
biological parents and the adoptee, except when the
biological parent is the spouse of the
adoptee."149 Under R.A. No. 8552, petitioner was also
entitled to an amended birth certificate "attesting to
the fact that the adoptee is the child of the adopter(s)"
and which certificate "shall not bear any notation that
it is an amended issue."150 That law also requires that
"[a]ll records, books, and papers relating to the
adoption cases in the files of the court, the Department
[of Social Welfare and Development], or any other
agency or institution participating in the adoption
proceedings shall be kept strictly confidential." 151 The
law therefore allows petitioner to state that her
adoptive parents were her birth parents as that was
what would be stated in her birth certificate anyway.
And given the policy of strict confidentiality of
adoption records, petitioner was not obligated to
disclose that she was an adoptee.
Clearly, to avoid a direct ruling on the qualifications of
petitioner, which it cannot make in the same case for
cancellation of COC, it resorted to opinionatedness
which is, moreover, erroneous. The whole process
undertaken by COMELEC is wrapped in grave abuse of
discretion.
On Residence
The tainted process was repeated in disposing of the
issue of whether or not petitioner committed false
material representation when she stated in her COC
116
that she has before and until 9 May 2016 been a
resident of the Philippines for ten (10) years and
eleven (11) months.
Petitioner's claim that she will have been a resident
for ten (10) years and eleven (11) months on the day
before the 2016 elections, is true.
The Constitution requires presidential candidates to
have ten (10) years' residence in the Philippines
before the day of the elections. Since the forthcoming
elections will be held on 9 May 2016, petitioner must
have been a resident of the Philippines prior to 9 May
2016 for ten (10) years. In answer to the requested
information of "Period of Residence in the Philippines
up to the day before May 09, 2016," she put in "10
years 11 months" which according to her pleadings in
these cases corresponds to a beginning date of 25 May
2005 when she returned for good from the U.S.
When petitioner immigrated to the U.S. in 1991, she
lost her original domicile, which is the Philippines.
There are three requisites to acquire a new domicile:
1. Residence or bodily presence in a new locality; 2. an
intention to remain there; and 3. an intention to
abandon the old domicile.152 To successfully effect a
change of domicile, one must demonstrate an actual
removal or an actual change of domicile; a bona
fide intention of abandoning the former place of
residence and establishing a new one and definite acts
which correspond with the purpose. In other words,
there must basically be animus manendi coupled
with animus non revertendi. The purpose to remain in
or at the domicile of choice must be for an indefinite
period of time; the change of residence must be
voluntary; and the residence at the place chosen for
the new domicile must be actual.153
Petitioner presented voluminous evidence showing
that she and her family abandoned their U.S. domicile
and relocated to the Philippines for good. These
evidence include petitioner's former U.S. passport
showing her arrival on 24 May 2005 and her return to
the Philippines every time she travelled abroad; e-mail
correspondences starting in March 2005 to September
2006 with a freight company to arrange for the
shipment of their household items weighing about
28,000 pounds to the Philippines; e-mail with the
Philippine Bureau of Animal Industry inquiring how to
ship their dog to the Philippines; school records of her
children showing enrollment in Philippine schools
starting June 2005 and for succeeding years; tax
identification card for petitioner issued on July 2005;
titles for condominium and parking slot issued in
February 2006 and their corresponding tax
declarations issued in April 2006; receipts dated 23
February 2005 from the Salvation Army in the U.S.
acknowledging donation of items from petitioner's
family; March 2006 e-mail to the U.S. Postal Service
confirming request for change of address; final
statement from the First American Title Insurance
Company showing sale of their U.S. home on 27 April
2006; 12 July 2011 filled-up questionnaire submitted
to the U.S. Embassy where petitioner indicated that
she had been a Philippine resident since May 2005;
affidavit from Jesusa Sonora Poe (attesting to the
return of petitioner on 24 May 2005 and that she and
her family stayed with affiant until the condominium
was purchased); and Affidavit from petitioner's
husband (confirming that the spouses jointly decided
to relocate to the Philippines in 2005 and that he
stayed behind in the U.S. only to finish some work and
to sell the family home).
The foregoing evidence were undisputed and the facts
were even listed by the COMELEC, particularly in its
Resolution in the Tatad, Contreras and Valdez cases.
However, the COMELEC refused to consider that
petitioner's domicile had been timely changed as of 24
May 2005. At the oral arguments, COMELEC
Commissioner Arthur Lim conceded the presence of
the first two requisites, namely, physical presence
and animus manendi, but maintained there was
no animus non-revertendi.154 The COMELEC
disregarded the import of all the evidence presented
by petitioner on the basis of the position that the
earliest date that petitioner could have started
residence in the Philippines was in July 2006 when her
application under R.A. No. 9225 was approved by the
BI. In this regard, COMELEC relied on Coquilla v.
COMELEC,155 Japzon v. COMELEC156 and Caballero v.
COMELEC. 157 During the oral arguments, the private
respondents also added Reyes v.
COMELEC.158 Respondents contend that these cases
decree that the stay of an alien former Filipino cannot
be counted until he/she obtains a permanent resident
visa or reacquires Philippine citizenship, a visa-free
entry under a balikbayan stamp being insufficient.
Since petitioner was still an American (without any
resident visa) until her reacquisition of citizenship
under R.A. No. 9225, her stay from 24 May 2005 to 7
July 2006 cannot be counted.
But as the petitioner pointed out, the facts in these
four cases are very different from her situation.
In Coquilla v. COMELEC,159 the only evidence presented
was a community tax certificate secured by the
candidate and his declaration that he would be
running in the elections. Japzon v. COMELEC160 did not
involve a candidate who wanted to count residence
prior to his reacquisition of Philippine citizenship.
With the Court decreeing that residence is distinct
from citizenship, the issue there was whether the
candidate's acts after reacquisition sufficed to
establish residence. In Caballero v. COMELEC, 161 the
candidate admitted that his place of work was abroad
and that he only visited during his frequent vacations.
In Reyes v. COMELEC,162 the candidate was found to be
an American citizen who had not even reacquired
Philippine citizenship under R.A. No. 9225 or had
renounced her U.S. citizenship. She was disqualified on
the citizenship issue. On residence, the only proof she
offered was a seven-month stint as provincial officer.
The COMELEC, quoted with approval by this Court,
said that "such fact alone is not sufficient to prove her
one-year residency."
It is obvious that because of the sparse evidence on
residence in the four cases cited by the respondents,
the Court had no choice but to hold that residence
could be counted only from acquisition of a permanent
resident visa or from reacquisition of Philippine
citizenship. In contrast, the evidence of petitioner is
overwhelming and taken together leads to no other
conclusion that she decided to permanently abandon
her U.S. residence (selling the house, taking the
children from U.S. schools, getting quotes from the
117
freight company, notifying the U.S. Post Office of the
abandonment of their address in the U.S., donating
excess items to the Salvation Army, her husband
resigning from U.S. employment right after selling the
U.S. house) and permanently relocate to the
Philippines and actually re-established her residence
here on 24 May 2005 (securing T.I.N, enrolling her
children in Philippine schools, buying property here,
constructing a residence here, returning to the
Philippines after all trips abroad, her husband getting
employed here). Indeed, coupled with her eventual
application to reacquire Philippine citizenship and her
family's actual continuous stay in the Philippines over
the years, it is clear that when petitioner returned on
24 May 2005 it was for good.
In this connection, the COMELEC also took it against
petitioner that she had entered the Philippines visa-
free as a balikbayan. A closer look at R.A. No. 6768 as
amended, otherwise known as the "An Act Instituting
a Balikbayan Program," shows that there is no
overriding intent to treat balikbayans as temporary
visitors who must leave after one year. Included in the
law is a former Filipino who has been naturalized
abroad and "comes or returns to the
Philippines." 163 The law institutes
a balikbayan program "providing the opportunity to
avail of the necessary training to enable
the balikbayan to become economically self-reliant
members of society upon their return to the
country"164in line with the government's
"reintegration program."165 Obviously, balikbayans are
not ordinary transients.
Given the law's express policy to facilitate the return
of a balikbayan and help him reintegrate into society,
it would be an unduly harsh conclusion to say in
absolute terms that the balikbayan must leave after
one year. That visa-free period is obviously granted
him to allow him to re-establish his life and
reintegrate himself into the community before he
attends to the necessary formal and legal
requirements of repatriation. And that is exactly what
petitioner did - she reestablished life here by enrolling
her children and buying property while awaiting the
return of her husband and then applying for
repatriation shortly thereafter.
No case similar to petitioner's, where the former
Filipino's evidence of change in domicile is extensive
and overwhelming, has as yet been decided by the
Court. Petitioner's evidence of residence is
unprecedented. There is no judicial precedent that
comes close to the facts of residence of petitioner.
There is no indication in Coquilla v. COMELEC,166 and
the other cases cited by the respondents that the Court
intended to have its rulings there apply to a situation
where the facts are different. Surely, the issue of
residence has been decided particularly on the facts-
of-the case basis.
To avoid the logical conclusion pointed out by the
evidence of residence of petitioner, the COMELEC
ruled that petitioner's claim of residence of ten (10)
years and eleven (11) months by 9 May 2016 in her
2015 COC was false because she put six ( 6) years and
six ( 6) months as "period of residence before May 13,
2013" in her 2012 COC for Senator. Thus, according to
the COMELEC, she started being a Philippine resident
only in November 2006. In doing so, the COMELEC
automatically assumed as true the statement in the
2012 COC and the 2015 COC as false.
As explained by petitioner in her verified pleadings,
she misunderstood the date required in the 2013 COC
as the period of residence as of the day she submitted
that COC in 2012. She said that she reckoned residency
from April-May 2006 which was the period when the
U.S. house was sold and her husband returned to the
Philippines. In that regard, she was advised by her
lawyers in 2015 that residence could be counted from
25 May 2005.
Petitioner's explanation that she misunderstood the
query in 2012 (period of residence before 13 May
2013) as inquiring about residence as of the time she
submitted the COC, is bolstered by the change which
the COMELEC itself introduced in the 2015 COC which
is now "period of residence in the Philippines up to the
day before May 09, 2016." The COMELEC would not
have revised the query if it did not acknowledge that
the first version was vague.
That petitioner could have reckoned residence from a
date earlier than the sale of her U.S. house and the
return of her husband is plausible given the evidence
that she had returned a year before. Such evidence, to
repeat, would include her passport and the school
records of her children.
It was grave abuse of discretion for the COMELEC to
treat the 2012 COC as a binding and conclusive
admission against petitioner. It could be given in
evidence against her, yes, but it was by no means
conclusive. There is precedent after all where a
candidate's mistake as to period of residence made in
a COC was overcome by evidence. In Romualdez-Marcos
v. COMELEC,167 the candidate mistakenly put seven (7)
months as her period of residence where the required
period was a minimum of one year. We said that "[i]t is
the fact of residence, not a statement in a certificate of
candidacy which ought to be decisive in determining
whether or not an individual has satisfied the
constitutions residency qualification requirement." The
COMELEC ought to have looked at the evidence
presented and see if petitioner was telling the truth
that she was in the Philippines from 24 May 2005. Had
the COMELEC done its duty, it would have seen that
the 2012 COC and the 2015 COC both correctly stated
the pertinent period of residency.
The COMELEC, by its own admission, disregarded the
evidence that petitioner actually and physically
returned here on 24 May 2005 not because it was
false, but only because COMELEC took the position
that domicile could be established only from
petitioner's repatriation under R.A. No. 9225 in July
2006. However, it does not take away the fact that in
reality, petitioner had returned from the U.S. and was
here to stay permanently, on 24 May 2005. When she
claimed to have been a resident for ten (10) years and
eleven (11) months, she could do so in good faith.
For another, it could not be said that petitioner was
attempting to hide anything. As already stated, a
petition for quo warranto had been filed against her
with the SET as early as August 2015. The event from
which the COMELEC pegged the commencement of
118
residence, petitioner's repatriation in July 2006 under
R.A. No. 9225, was an established fact to repeat, for
purposes of her senatorial candidacy.
Notably, on the statement of residence of six (6) years
and six (6) months in the 2012 COC, petitioner
recounted that this was first brought up in the media
on 2 June 2015 by Rep. Tobias Tiangco of the United
Nationalist Alliance. Petitioner appears to have
answered the issue immediately, also in the press.
Respondents have not disputed petitioner's evidence
on this point. From that time therefore when Rep.
Tiangco discussed it in the media, the stated period of
residence in the 2012 COC and the circumstances that
surrounded the statement were already matters of
public record and were not hidden.
Petitioner likewise proved that the 2012 COC was also
brought up in the SET petition for quo warranto. Her
Verified Answer, which was filed on 1 September
2015, admitted that she made a mistake in the 2012
COC when she put in six ( 6) years and six ( 6) months
as she misunderstood the question and could have
truthfully indicated a longer period. Her answer in the
SET case was a matter of public record. Therefore, when
petitioner accomplished her COC for President on 15
October 2015, she could not be said to have been
attempting to hide her erroneous statement in her 2012
COC for Senator which was expressly mentioned in her
Verified Answer.
The facts now, if not stretched to distortion, do not
show or even hint at an intention to hide the 2012
statement and have it covered by the 2015
representation. Petitioner, moreover, has on her side
this Court's pronouncement that:
Concededly, a candidate's disqualification to run for
public office does not necessarily constitute material
misrepresentation which is the sole ground for
denying due course to, and for the cancellation of, a
COC. Further, as already discussed, the candidate's
misrepresentation in his COC must not only refer to a
material fact (eligibility and qualifications for elective
office), but should evince a deliberate intent to
mislead, misinform or hide a fact which would
otherwise render a candidate ineligible. It must be
made with an intention to deceive the electorate as to
one's qualifications to run for public office.168
In sum, the COMELEC, with the same posture of
infallibilism, virtually ignored a good number of
evidenced dates all of which can evince animus
manendi to the Philippines and animus non revertedi to
the United States of America. The veracity of the
events of coming and staying home was as much as
dismissed as inconsequential, the focus having been
fixed at the petitioner's "sworn declaration in her COC
for Senator" which the COMELEC said "amounts to a
declaration and therefore an admission that her
residence in the Philippines only commence sometime
in November 2006"; such that "based on this
declaration, [petitioner] fails to meet the residency
requirement for President." This conclusion, as
already shown, ignores the standing jurisprudence
that it is the fact of residence, not the statement of the
person that determines residence for purposes of
compliance with the constitutional requirement of
residency for election as President. It ignores the
easily researched matter that cases on questions of
residency have been decided favorably for the
candidate on the basis of facts of residence far less in
number, weight and substance than that presented by
petitioner.169 It ignores, above all else, what we
consider as a primary reason why petitioner cannot be
bound by her declaration in her COC for Senator which
declaration was not even considered by the SET as an
issue against her eligibility for Senator. When
petitioner made the declaration in her COC for Senator
that she has been a resident for a period of six (6)
years and six (6) months counted up to the 13 May
2013 Elections, she naturally had as reference the
residency requirements for election as Senator which
was satisfied by her declared years of residence. It was
uncontested during the oral arguments before us that
at the time the declaration for Senator was made,
petitioner did not have as yet any intention to vie for
the Presidency in 2016 and that the general public was
never made aware by petitioner, by word or action,
that she would run for President in 2016. Presidential
candidacy has a length-of-residence different from
that of a senatorial candidacy. There are facts of
residence other than that which was mentioned in the
COC for Senator. Such other facts of residence have
never been proven to be false, and these, to repeat
include:
[Petitioner] returned to the Philippines on 24 May
2005. (petitioner's] husband however stayed in the
USA to finish pending projects and arrange the sale of
their family home.
Meanwhile [petitioner] and her children lived with her
mother in San Juan City. [Petitioner] enrolled Brian in
Beacon School in Taguig City in 2005 and Hanna in
Assumption College in Makati City in 2005. Anika was
enrolled in Learning Connection in San Juan in 2007,
when she was already old enough to go to school.
In the second half of 2005, [petitioner] and her
husband acquired Unit 7F of One Wilson Place
Condominium in San Juan. [Petitioner] and her family
lived in Unit 7F until the construction of their family
home in Corinthian Hills was completed.
Sometime in the second half of 2005, [petitioner's]
mother discovered that her former lawyer who
handled [petitioner's] adoption in 1974 failed to
secure from the Office of the Civil Registrar of Iloilo a
new Certificate of Live Birth indicating [petitioner's]
new name and stating that her parents are "Ronald
Allan K. Poe" and "Jesusa L. Sonora."
In February 2006, [petitioner] travelled briefly to the
US in order to supervise the disposal of some of the
family's remaining household
belongings.1a\^/phi1 [Petitioner] returned to the
Philippines on 11 March 2006.
In late March 2006, [petitioner's] husband informed
the United States Postal Service of the family's
abandonment of their address in the US.
The family home in the US was sole on 27 April 2006.
In April 2006, [petitioner's] husband resigned from his
work in the US. He returned to the Philippines on 4
119
May 2006 and began working for a Philippine 4. dated 23 December 2015 of the COMELEC En
company in July 2006. Banc, upholding the 11 December 2015 Resolution of
the First Division.
In early 2006, [petitioner] and her husband acquired a
vacant lot in Corinthian Hills, where they eventually are hereby ANNULED and SET ASIDE. Petitioner
built their family home.170 MARY GRACE NATIVIDAD SONORA POE-
LLAMANZARES is DECLARED QUALIFIED to be a
In light of all these, it was arbitrary for the COMELEC candidate for President in the National and Local
to satisfy its intention to let the case fall under the Elections of 9 May 2016.
exclusive ground of false representation, to consider
no other date than that mentioned by petitioner in her SO ORDERED.
COC for Senator.
JOSE PORTUGAL PEREZ
All put together, in the matter of the citizenship and Associate Justice
residence of petitioner for her candidacy as President
of the Republic, the questioned Resolutions of the WE CONCUR:
COMELEC in Division and En Banc are, one and all,
deadly diseased with grave abuse of discretion from See Concurring Opinion
root to fruits. MARIA LOURDES P.A. SERENO
Chief Justice
WHEREFORE, the petition is GRANTED. The
Resolutions, to wit:
Please see Concurring
See Dissenting
1. dated 1 December 2015 rendered through the Opinion
Opinion
COMELEC Second Division, in SPA No. 15-001 (DC), PRESBITERO J.
ANTONIO T. CARPIO
entitled Estrella C. Elamparo, petitioner, vs. Mary Grace VELASCO, JR.
Associate Justice
Natividad Sonora Poe-Llamanzares, respondent, stating Associate Justice
that:
Please see Separate
[T]he Certificate of Candidacy for President of the Dissenting Opinion See Dissenting
Republic of the Philippines in the May 9, 2016 National TERESITA J. opinion
and Local Elections filed by respondent Mary Grace LEONARDO-DE ARTURO D. BRION
Natividad Sonora Poe-Llamanzares is hereby CASTRO Associate Justice
GRANTED. Associate Justice

2. dated 11 December 2015, rendered through the I join J. Caguioa's

COMELEC First Division, in the consolidated cases SPA Opinion
No. 15-002 (DC) entitled Francisco S. Tatad, petitioner, LUCAS P. BERSAMIN
DIOSDADO M.
vs. Mary Grace Natividad Sonora Poe-Llamanzares, Associate Justice
PERALTA
respondent; SPA No. 15-007 (DC) entitled Antonio P. Associate Justice
Contreras, petitioner, vs. Mary Grace Natividad Sonora
Poe-Llamanzares, respondent; and SPA No. 15-139
(DC) entitled Amado D. Valdez, petitioner, v. Mary Pls. see Dissenting
Grace Natividad Sonora Poe-Llamanzares, respondent; Opinion JOSE CATRAL
stating that: MARIANO C. DEL MENDOZA
CASTILLO Associate Justice
WHEREFORE, premises considered, the Commission Associate Justice
RESOLVED, as it hereby RESOLVES, to GRANT the
petitions and cancel the Certificate of Candidacy of (I concur with the
MARY GRACE NATIVIDAD SONORA POE- Dissenting Opinion of See Dissenting
LLAMANZARES for the elective position of President Justice Perlas- Opinion
of the Republic of the Philippines in connection with Bernabe) ESTELA M. PERLAS-
the 9 May 2016 Synchronized Local and National BIENVENIDO L. BERNABE
Elections. REYES Associate Justice
Associate Justice
3. dated 23 December 2015 of the COMELEC En
Banc, upholding the 1 December 2015 Resolution of See Separate See Concurring
the Second Division stating that: Concurring Opinion Opinion
MARVIC M.V.F. FRANCIS H.
WHEREFORE, premises considered, the Commission LEONEN JARDELEZA
RESOLVED, as it hereby RESOLVES, to DENY the Associate Justice Associate Justice
Verified Motion for Reconsideration of SENATOR
MARY GRACE NATIVIDAD SONORA POE-
LLAMANZARES. The Resolution dated 11 December See Concurring Opinion
2015 of the Commission First Division is AFFIRMED. ALFREDO BENJAMIN S. CAGUIOA
Associate Justice

CERTIFICATION

120
Pursuant to Section 13, Article VIII of the Constitution, 21 Id.
it is hereby certified that the conclusions in the above
Decision had been reached in consultation before the 22 Supra note 3.
case was assigned to the writer of the opinion of the
Court. 23 Supra note 20.

MARIA LOURDES P.A. SERENO 24 Supra note 3.

Chief Justice
25 Supra note 20.

26 Supra note 3.
Footnotes 27 Petition for Certiorari, supra note 4.
1Petition for Certiorari in G.R. Nos. 221698-
700, pp. 15-16; COMELEC First Division
28 Id.
Resolution dated 11 December 2015 in SPA
No. 15-002 (DC), SPA No. 15-007 (DC) and
29Id. at 23; COMELEC First Division
SPA No. 15-139 (DC), p. 2. Resolution, supra note 3.

2 Petition for Certiorari, id. at 16-17;

30 Id.; id.

3COMELEC First Division Resolution, supra

31 Id.; id.
note 1 at 4.
32 Id.; id.
4 Petition for Certiorari, supra note 1 at 22.
33Id. at 23-24; COMELEC First Division
5 Id. at 17; Comment (on the Petition Resolution, supra note 1 at 5.
for Certiorari in G.R. No. 221697) filed by
respondent COMELEC dated 11January 2016, 34 Id. at 24; id.
p. 6.
35 Id.
6 Petition for Certiorari, id.; id. at 7.
36 Supra note 34.
7 Id. at 18.
37Petition for Certiorari, supra note 1 at 25;
8 Supra note 6. COMELEC First Division Resolution, supra
note 1 at 5.
9 Id.
38 Id. at 25-26; id.
10COMELEC First Division Resolution, supra
note 1 at 3. 39 Id. at 26; id.

11 Petition for Certiorari, supra note 1 at 17. 40 Id.; id.

12 Id. at 18. 41 Id.; id.

13 Id. 42 Id. at 32; id. at 6.

14COMELEC First Division Resolution, supra 43 Supra note 39.

note 10.
44Petition for Certiorari, supra note 1 at 26-
15 Id. 27; COMELEC First Division Resolution, supra
note 1 at 5.
16 Supra note 1 at 17-18.
45 Section 5, R.A. No. 9225 states:
17COMELEC First Division Resolution, supra
note 10. SEC. 5. Civil and Political Rights and
Liabilities. - Those who retain or re-
18 Id. acquire Philippine citizenship under
this Act shall enjoy full civil and
19 Id. political rights and be subject to all
attendant liabilities and
responsibilities under existing laws of
20 Petition for Certiorari, supra note 1 at 20. the Philippines and the following
conditions:

121
 xx xx 67 Supra note 64.

3. Those appointed to any public 68Petition for Certiorari, supra note 65 at 8;

office shall subscribe and swear to an
oath of allegiance to the Republic of
the Philippines and its duly
constituted authorities prior to their
assumption of office: Provided, That
they renounce their oath of allegiance
to the country where they took that
oath;
xx xx
46 Petition for Certiorari, supra note 1 at 27.
47 Id. at 29.
48 Supra note 46; supra note 1 at 6.
49 Petition for Certiorari, supra note 1 at 30;
id.
50 Id.
COMELEC Second Division Resolution, supra
note 60 at 8-11.
69COMELEC Second Division Resolution,
supra note 60 at 34.
70 Comment, supra note 59 at 10.
71Section 1 of Rule 25 of the COMELEC Rules
of Procedure, as amended, states:
Rule 25 - Disqualification of
Candidates
Section 1. Grounds. - Any candidate
who, in an action or protest in which
he is a party, is declared by final
decision of a competent court, guilty
of, or found by the Commission to be
suffering from any disqualification
provided by law or the Constitution.

51 Supra note 48. A Petition to Disqualify a Candidate

invoking grounds for a Petition to
52Petition for Certiorari, supra note 1 at 31; Deny to or Cancel a Certificate of
COMELEC First Division Resolution, supra Candidacy or Petition to Declare a
note 1 at 6. Candidate as a Nuisance Candidate, or
a combination thereof, shall be
summarily dismissed.
53 Comment, supra note 5 at 9.
72 Petition to Disqualify dated 19 October
54 Petition for Certiorari, supra note 1 at 31. 2015 filed by Tatad in SPA No. 15-002 (DC), p.
9.
55 Id. at 32; Comment, supra note 53 at 10.
73 Id., at 9 and 14.
56Id.; COMELEC First Division Resolution,
supra note 1 at 6. 74 Id. at 10.
57 Id.; id. at 7. 75 Id. at 12.
58 Id.; id. 76 Id. at 11.
59Comment (on the Petition in G.R. No. 77COMELEC First Division Resolution, supra
221697) filed by respondent Elamparo, dated note 1 at 8.
January 6, 2016, p. 7.
78 Id.
60 COMELEC Second Division Resolution dated
December 1, 2015 in SPA No. 15-001 (DC), p.
7.
79 Petition to Disqualify, supra note 72 at 11.

61 Id. at 7-8.
80 Id. at 21.

62 Supra note 60.

81 Id.

63 Id.
82 Id.

64 Id. at 8.
83 Supra note I at 8.

65 Id.
84 Id.

66 Petition for Certiorari in GR. No. 221697, p.

85Contreras' petition is a petition for
7. cancellation of Grace Poe's COC under Section
78 of the Omnibus Election Code which states
that:

122
 Sec. 78. Petition to deny due course to
or cancel a certificate of candidacy. - A
verified petition seeking to deny due
course or to cancel a certificate of
candidacy may be filed by the person
exclusively on the ground that any
material representation contained
therein as required under Section 74
hereof is false. The petition may be
filed at any time not later than
twenty-five days from the time of the
filing of the certificate of candidacy
and shall be decided, after due notice
and hearing, not later than fifteen
days before the election.
104; or (e) violated any of Sections
80, 83, 85, 86 and 261, paragraphs d,
e, k, v, and cc, sub-paragraph 6, shall
be disqualified from continuing as a
candidate, or if he has been elected,
from holding the office. Any person
who is a permanent resident of or an
immigrant to a foreign country shall
not be qualified to run for any
elective office under this Code, unless
said person has waived his status as
permanent resident or immigrant of a
foreign country in accordance with
the residence requirement provided
for in the election laws.

86Petition for Cancellation of Grace Poe's COC 90COMELEC First Division Resolution, supra
dated 17 October 2015 filed by Contreras in note 1 at 12.
SPA No. 15-007 (DC), pp. 2-4.
91 Id. at 10.
87 Id. at 3; Petition for Certiorari, supra note l
at 13. 92 Id.

88 Id. at 3-4. 93 Id. at 9.

89Sections 12 and 68 of the Omnibus Election 94 Id.

Code provide:
95 Id.
Sec. 12. Disqualifications. -Any person
who has been declared by competent 96 Id.
authority insane or incompetent, or
has been sentenced by final judgment
for subversion, insurrection, rebellion
97 Id.
or for any offense for which he has
been sentenced to a penalty of more
98 Id.
than eighteen months or for a crime
involving moral turpitude, shall be 99 Id.at 9-10.
disqualified to be a candidate and to
hold any office, unless he has been 100 Id.at 10.
given plenary pardon or granted
amnesty. 101 Id.

This disqualifications to be a 102 Id.

candidate herein provided shall be
deemed removed upon the 103The 11 December 2015 Resolution of the
declaration by competent authority
COMELEC First Division was concurred in by
that said insanity or incompetence
Commissioners Louie Tito F. Guia and Ma.
had been removed or after the
Rowena Amelia V. Guanzon. Presiding
expiration of a period of five years
Commissioner Christian Robert S. Lim issued
from his service of sentence, unless
a Separate Dissenting Opinion.
within the same period he again
becomes disqualified.
104 318 Phil. 329 (1995).
Sec. 68. Disqualifications. - Any
candidate who, in an action or protest
105 595 Phil. 449 (2008).
in which he is a party is declared by
final decision of a competent court Romualdez-Marcos v. COMELEC, supra note
106

guilty of, or found by the Commission 104 at 396-397.

of having (a) given money or other
material consideration to influence,
induce or corrupt the voters or public
officials performing electoral
functions; (b) committed acts of
terrorism to enhance his candidacy;
(c) spent in his election campaign an
amount in excess of that allowed by
this Code; (d) solicited, received or
made any contribution prohibited
under Sections 89, 95, 96, 97 and
107Id. at 397-398; Fermin v. COMELEC, supra
note 105 at 471-472.
108In A.M. No. 02-6-02-SC, Resolution
Approving The Proposed Rule on Adoption
(Domestic and Inter-Country), effective 22
August 2002, "foundling" is defined as "a
deserted or abandoned infant or child whose
parents, guardian or relatives are unknown;

123
or a child committed to an orphanage or
charitable or similar institution with
unknown facts of birth and parentage and
registered in the Civil Register as a
"foundling."
109 Article IV-Citizenship.
Sec. I. The following are citizens of
the Philippines:
(1) Those who are citizens of
the Philippine Islands at the
time of the adoption of this
Constitution,
(2) Those born in the
Philippine Islands of foreign
parents who, before the
adoption of this Constitution,
had been elected to public
office in the Philippine
Islands.
(3) Those whose fathers are
citizens of the Philippines.
(4) Those whose mothers are
citizens of the Philippines
and, upon reaching the age of
majority, elect Philippine
citizenship.
(5) Those who are
naturalized in accordance
with law.
Section 2. Philippine citizenship may
be lost or reacquired in the manner
provided by law.
110Article 163 to 182, Title VI of Executive
Order No. 209, otherwise known as The
Family Code of the Philippines, which took
effect on 4 August 1988.
111Statistics from the PSA or its predecessor
agencies are admissible evidence. See Herrera
v. COMELEC, 376 Phil. 443 (I 999)
and Bagabuyo v. COMELEC, 593 Phil. 678
(2008). In the latter case, the Court even took
judicial notice of the figures.
112Transcipt of Stenographic Notes, 9
February 2016, p. 40.
113 Section 3 (y), Rule 131.
114 236 Phil. 307 (1987).
115 Id. at314-315.
116English translation of the Spanish original
presented in the petitioner's pleadings before
the COMELEC and this Court. The COMELEC
and private respondents have not disputed
the accuracy and correctness of the
translation.
117I Jose M. Aruego, The Framing of the
Philippine Constitution 209 (1949).
118 TSN, 16 February 2016, pp. 20-21.
119 117 Phil. 976 (1963).
120 Id. at 978-979.
121See Section 5 of the RA No. 8552: "Location
of Unknown Parent(s). - It shall be the duty of
the Department or the child-caring agency
which has custody of the child to exert all
efforts to locate his/her unknown biological
parent(s). If such efforts fail, the child shall be
registered as a foundling and subsequently be
the subject of legal proceedings where he/she
shall be declared abandoned." (Underlining
supplied)
See Exhibit "l" in SPA No. 15-001 (DC) and
122
SPA No. 15-00 (DC).
See Exhibit "2" in SPA No. 15-001 (DC) and
123
SPA No. 15-00 (DC).
124Razon, Jr. v. Tagitis, 621 Phil. 536, 600
(2009) citing Pharmaceutical and Health Care
Assoc. of the Philippines v. Duque III, 561 Phil.
386, 398 (2007).
125Article 38.1, paragraphs (b) and (c) of the
Statute of the International Court of Justice.
126Mijares v. Ranada, 495 Phil. 372, 395
(2005).
127Pharmaceutical and Health Care Assoc. of
the Philippines v. Duque III, 561 Phil. 386, 400
(2007).
128International School Alliance of Educators v.
Quisumbing, 388 Phil. 661, 672-673 (2000).
129 CONSTITUTION, Art. III, Sec. 1.
130Rep. of the Philippines v.
Sandiganbayan, 454 Phil. 504, 545 (2003).
131 "Everyone has the right to a nationality."
132See Introductory Note to the United
Nations Convention on the Reduction of
Statelessness issued by the United Nations
High Commissioner on Refugees.
133 Supra note 124.
134 Supra note 126.
135 Id. at 392; See footnote No. 55 of said case.
124
136Pharmaceutical and Health Care Assoc. of 162 Supra note 158.
the Philippines v. Duque III, supra note 127.
163Republic Act No. 6768 (1989), as amended,
137 See Exhibits 38 and 39-series. Sec. 2(a).

138 Opening Statement of the Solicitor General, 164Republic Act No. 6768 (1989), as amended,
p. 6. Sec. I.

First Division resolution dated

139 11 165Republic Act No. 6768 (1989), as amended,
December 2015, upheld in toto by the Sec. 6.
COMELEC En Banc.
166 Supra note 155.
140 409 Phil. 633, 649 (2001).
167Supra note 104 at 326. (Emphasis
141 692 Phil. 407, 420 (2012). supplied)

142 551 Phil. 368, 381 (2007). Ugdoracion, Jr. v. COMELEC, 575 Phil. 253,
168

265-266 (2008).
143 53 I Phil. 407, 417 (2006).
169In Mitra v. COMELEC, et al., [636 Phil. 753
144 Supra note 142. (2010)], It was ruled that the residence
requirement can be complied with through an
145 Supra note 140 at 646. incremental process including acquisition of
business interest in the pertinent place and
lease of feedmill building as residence.
146 Id. at 651.
170COMELEC Resolution dated 11
147 G.R. No. 217126-27, 10 November 2015. December2015 in SPA No. 15-002 (DC), pp. 4-
5.
148 Id.

Implementing Rules and Regulations of

149
The Lawphil Project - Arellano Law Foundation
Republic Act No. 8552, Art. VI, Sec. 33.

150 Republic Act No. 8552 (1998), Sec. 14.

151 Republic Act No. 8552 (1998), Sec. 15.
152 Fernandez v. House of Representatives
Electoral Tribunal, 623 Phil. 628, 660 (2009)
citing Japzon v. COMELEC, 596 Phil. 354, 370-
372 (2009) further citing Papandayan, Jr. v.
COMELEC, 430 Phil. 754, 768-770 (2002)
further further citing Romualdez v. RTC,
Br. 7, Tacloban City, G.R. No. 104960, 14
September 1993, 226 SCRA408, 415.
153Domino v. COMELEC, 369 Phil. 798, 819
(1999).
154 TSN, 16 February 2016, p. 120.
155 434 Phil. 861 (2002).
156 596 Phil. 354 (2009).
157 G.R. No. 209835, 22 September 2015.
G.R. No. 207264, 25 June 2013, 699 SCRA
158
522.
159 Supra note 155.
SYNOPSIS
Petitioner Mercado and private respondent
Manzano were candidates for vice mayor of the City of
Makati in the May 11, 1998 elections. The
proclamation of private respondent was suspended in
view of a pending petition for disqualification filed by
a certain Ernesto Mamaril who alleged that private
respondent was not a citizen of the Philippines but of
the United States. The Second Division of the
COMELEC granted the petition of Mamaril and ordered
the cancellation of the certificate of candidacy of
private respondent on the ground that he is a dual
citizen and under Sec. 40 of the Local Government
Code, persons with dual citizenship are disqualified
from running for any elective position. Private
respondent filed a motion for reconsideration. The
motion remained pending until after the election. The
board of canvassers tabulated the votes but suspended
the proclamation of the winner. Petitioner sought to
intervene in the case for disqualification. COMELEC en
banc reversed the decision and declared private
respondent qualified to run for the position. Pursuant
to the ruling of the COMELEC en banc, the board of
canvassers proclaimed private respondent as vice
mayor. This petition sought the reversal of the
resolution of the COMELEC en banc and to declare the
private respondent disqualified to hold the office of
the vice mayor of Makati.

160 Supra note 156. On the issue of whether the petitioner has
personality to bring this suit considering that he was
not the original party in the disqualification case, the
161 Supra note 157.
Supreme Court ruled that under Sec. 6 of R.A. No.

125
6646, otherwise known as the Electoral Reforms Law
of 1987, intervention may be allowed in proceedings
for disqualification even after election if there has yet
been no final judgment rendered. As regards the issue
of citizenship, the Court ruled that by filing a
certificate of candidacy when he ran for
his present post, private respondent elected
Philippine citizenship and in effect renounced his
American citizenship.
SYLLABUS
1. POLITICAL LAW; ELECTORAL REFORMS LAW OF
1987 (R.A. No. 6646); INTERVENTION,
ALLOWED IN PROCEEDINGS FOR
DISQUALIFICATION EVEN AFTER ELECTION IF
THERE HAS BEEN NO FINAL JUDGMENT
RENDERED; CASE AT BAR. Private respondent
argues that petitioner has neither legal interest in
the matter in litigation nor an interest to protect
because he is a defeated candidate for the vice-
mayoralty post of Makati City [who] cannot be
proclaimed as the Vice-Mayor of Makati City even
if the private respondent be ultimately
disqualified by final and executory judgment. The
flaw in this argument is it assumes that, at the
time petitioner sought to intervene in the
proceedings before the COMELEC, there had
already been a proclamation of the results of the
election for the vice mayoralty contest for Makati
City, on the basis of which petitioner came out
only second to private respondent. The fact,
however, is that there had been no proclamation
at that time. Certainly, petitioner had, and still
has, an interest in ousting private respondent
from the race at the time he sought to
intervene. The rule in Labo vs.
COMELEC, reiterated in several cases, only
applies to cases in which the election of the
respondent is contested, and the question is
whether one who placed second to the
disqualified candidate may be declared the
winner. In the present case, at the time
petitioner filed a Motion for leave to File
Intervention on May 20, 1998, there had been no
proclamation of the winner, and petitioners
purpose was precisely to have private
respondent disqualified from running for [an]
elective local position under Section 40(d) of R.A.
No. 7160. If Ernesto Mamaril (who originally
instituted the disqualification proceedings), a
registered voter of Makati City, was competent to
bring the action, so was petitioner since the latter
was a rival candidate for vice mayor of Makati
City. Nor is petitioners interest in the matter in
litigation any less because he filed a motion for
intervention only on May 20, 1998, after private
respondent had been shown to have garnered the
highest number of votes among the candidates
for vice mayor. That petitioner had a right to
intervene at that stage of the proceedings for the
disqualification against private respondent is
clear from Section 6 of R.A. No. 6646, otherwise
known as the Electoral Reforms Law of 1987,
which provides: Any candidate who has been
declared by final judgment to be disqualified shall
not be voted for, and the votes cast for him shall
not be counted. If for any reason a candidate is
not declared by final judgment before an election
to be disqualified and he is voted for and receives
the winning number of votes in such election, the
Court or Commission shall continue with the trial
and hearing of the action, inquiry, or protest and,
upon motion of the complainant or
any intervenor, may during the pendency thereof
order the suspension of the proclamation of such
candidate whenever the evidence of guilt is
strong. Under this provision, intervention may
be allowed in proceedings for disqualification
even after election if there has yet been no final
judgment rendered.
2. ID.; CITIZENSHIP; DUAL CITIZENSHIP;
DISTINGUISHED FROM DUAL
ALLEGIANCE.Dual citizenship is different from
dual allegiance. The former arises when, as a
result of the concurrent application of the
different laws of two or more states, a person is
simultaneously considered a national by the said
states. For instance, such a situation may arise
when a person whose parents are citizens of a
state which adheres to the principle of jus
sanguinis is born in a state which follows the
doctrine of jus soli. Such a person, ipso facto and
without any voluntary act on his part, is
concurrently considered a citizen of both
states. Considering the citizenship clause (Art.
IV) of our Constitution, it is possible for the
following classes of citizens of the Philippines to
posses dual citizenship: (1) Those born of
Filipino fathers and/or mothers in foreign
countries which follow the principle of jus soli;
(2) Those born in the Philippines of Filipino
mothers and alien fathers if by the laws of their
fathers country such children are citizens of that
country; (3) Those who marry aliens if by the
laws of the latters country the former are
considered citizens, unless by their act or
omission they are deemed to have renounced
Philippine citizenship. There may be other
situations in which a citizen of the Philippines
may, without performing any act, be also a citizen
of another state; but the above cases are possible
given the constitutional provisions on
citizenship. Dual allegiance, on the other hand,
refers to the situation in which a person
simultaneously owes, by some positive act,
loyalty to two or more states. While dual
citizenship is involuntary, dual allegiance is the
result of an individuals volition. With respect to
dual allegiance, Article IV, Section 5 of the
Constitution provides: Dual allegiance of citizens
is inimical to the national interest and shall be
dealt with by law.
3. ID.; ID.; ID.; ID.; RATIONALE. In including Section 5
in Article IV on citizenship, the concern of the
Constitutional Commission was not with dual
citizens per se but with naturalized citizens who
maintain their allegiance to their countries of
origin even after their naturalization. Hence, the
phrase dual citizenship in R.A. No. 7160, Section
40(d) and in R.A. No. 7854, Section 20 must be
understood as referring to dual allegiance.
Consequently, persons with mere dual citizenship
do not fall under this disqualification. Unlike
those with dual allegiance, who must, therefore,
be subject to strict process with respect to the
termination of their status, for candidates with
dual citizenship, it should suffice if, upon the
filing of their certificates of candidacy, they elect
126
 Philippine citizenship to terminate their status as
persons with dual citizenship considering that
their condition is the unavoidable consequence of
conflicting laws of different states. As Joaquin G.
Bernas, one of the most perceptive members of
the Constitutional Commission, pointed out:
[D]ual citizenship is just a reality imposed on us
because we have no control of the laws on
citizenship of other countries. We recognize a
child of a Filipino mother. But whether or not she
is considered a citizen of another country is
something completely beyond our control. By
electing Philippine citizenship, such candidates at
the same time forswear allegiance to the other
country of which they are also citizens and
thereby terminate their status as dual citizens. It
may be that, from the point of view of the foreign
state and of its laws, such an individual has not
effectively renounced his foreign citizenship.
4. ID.; ID.; FILING OF THE CERTIFICATE OF
CANDIDACY SUFFICED TO RENOUNCE
AMERICAN CITIZENSHIP; CASE AT BAR. By
filing a certificate of candidacy when he ran for
his present post, private respondent elected
Philippine citizenship and in effect renounced his
American citizenship. The filing of such
certificate of candidacy sufficed to renounce his
American citizenship, effectively removing any
disqualification he might have as a dual
citizen. Thus, in Frivaldo vs. COMELEC it was
held: It is not disputed that on January 20, 1983
Frivaldo became an American. Would the
retroactivity of his repatriation not effectively
give him dual citizenship, which under Sec. 40 of
the Local Government Code would disqualify him
from running for any elective local position? We
answer this question in the negative, as there is
cogent reason to hold that Frivaldo was really
STATELESS at the time he took said oath of
allegiance and even before that, when he ran for
governor in 1988. In his Comment, Frivaldo
wrote that he had long renounced and had long
abandoned his American citizenship-long before
May 8, 1995. At best, Frivaldo was stateless in the
interim-when he abandoned and renounced his
US citizenship but before he was repatriated to
his Filipino citizenship. On this point, we quote
from the assailed Resolution dated December 19,
1995: By the laws of the United States, petitioner
Frivaldo lost his American citizenship when he
took his oath of allegiance to the Philippine
Government when he ran for Governor in 1988,
in 1992, and in 1995. Every certificate of
candidacy contains an oath of allegiance to the
Philippine Government. These factual findings
that Frivaldo has lost his foreign nationality long
before the elections of 1995 have not been
effectively rebutted by Lee. Furthermore, it is
basic that such findings of the Commission are
conclusive upon this Court, absent any showing
of capriciousness or arbitrariness or abuse. Until
the filing of his certificate of candidacy on March
21, 1998, private respondent had dual
citizenship. The acts attributed to him can be
considered simply as the assertion of his
American nationality before the termination of
his American citizenship. What this Court said
in Aznar vs. COMELEC applies mutatis mutandis to
private respondent in the case at bar:
Considering the fact that admittedly Osmea was
both a Filipino and an American, the mere fact
that he has a Certificate stating he is an American
does not mean that he is not still a Filipino [T]he
Certification that he is an American does not
mean that he is not still a Filipino, possessed as
he is, of both nationalities or
citizenships. Indeed, there is no express
renunciation here of Philippine citizenship; truth
to tell, there is no implied renunciation of said
citizenship. When We consider that the
renunciation needed to lose Philippine
citizenship must be express, it stands to reason
that there can be no such loss of Philippine
citizenship when there is no renunciation, either
express or implied. To recapitulate, by declaring
in his certificate of candidacy that he is a Filipino
citizen; that he is not a permanent resident or
immigrant of another country; that he will defend
and support the Constitution of the Philippines
and bear true faith and allegiance thereto and
that he does so without mental reservation,
private respondent has, as far as the laws of this
country are concerned, effectively repudiated
his American citizenship and anything which he
may have said before as a dual citizen. On the
other hand, private respondents oath of
allegiance to the Philippine, when considered
with the fact that he has spent his youth and
adulthood, received his education, practiced his
profession as an artist, and taken part in past
elections in this country, leaves no doubt of his
election of Philippine citizenship.
APPEARANCE OF COUNSEL
Balase, Tamase, Alampay Law Office for petitioner.
Siguion Reyna, Montecillo Ongsiako for private
respondent.
G.R. No. 135083. May 26, 1999]
ERNESTO S. MERCADO, petitioner, vs. EDUARDO
BARRIOS MANZANO and the COMMISSION
ON ELECTIONS, respondents.
DECISION
MENDOZA, J.:
Petitioner Ernesto S. Mercado and private
respondent Eduardo B. Manzano were candidates for
vice mayor of the City of Makati in the May 11, 1998
elections. The other one was Gabriel V. Daza III. The
results of the election were as follows:
Eduardo B. Manzano 103,853
Ernesto S. Mercado 100,894
Gabriel V. Daza III 54,275[1]
The proclamation of private respondent was
suspended in view of a pending petition for
disqualification filed by a certain Ernesto Mamaril who
alleged that private respondent was not a citizen of the
Philippines but of the United States.
127
 In its resolution, dated May 7, 1998,[2] the Second
Division of the COMELEC granted the petition of
Mamaril and ordered the cancellation of the certificate
of candidacy of private respondent on the ground that
he is a dual citizen and, under 40(d) of the Local
Government Code, persons with dual citizenship are
disqualified from running for any elective
position. The COMELECs Second Division said:
What is presented before the Commission is a petition
for disqualification of Eduardo Barrios Manzano as
candidate for the office of Vice-Mayor of Makati City in
the May 11, 1998 elections. The petition is based on
the ground that the respondent is an American citizen
based on the record of the Bureau of Immigration and
misrepresented himself as a natural-born Filipino
citizen.
In his answer to the petition filed on April 27, 1998,
the respondent admitted that he is registered as a
foreigner with the Bureau of Immigration under Alien
Certificate of Registration No. B-31632 and alleged
that he is a Filipino citizen because he was born in
1955 of a Filipino father and a Filipino mother. He was
born in the United States, San Francisco, California, on
September 14, 1955, and is considered an American
citizen under US Laws. But notwithstanding his
registration as an American citizen, he did not lose his
Filipino citizenship.
Judging from the foregoing facts, it would appear that
respondent Manzano is both a Filipino and a US
citizen. In other words, he holds dual citizenship.
The question presented is whether under our laws, he
is disqualified from the position for which he filed his
certificate of candidacy. Is he eligible for the office he
seeks to be elected?
Under Section 40(d) of the Local Government Code,
those holding dual citizenship are disqualified from
running for any elective local position.
WHEREFORE, the Commission hereby declares the
respondent Eduardo Barrios Manzano DISQUALIFIED
as candidate for Vice-Mayor of Makati City.
On May 8, 1998, private respondent filed a
motion for reconsideration.[3] The motion remained
pending even until after the election held on May 11,
1998.
Accordingly, pursuant to Omnibus Resolution No.
3044, dated May 10, 1998, of the COMELEC, the board
of canvassers tabulated the votes cast for vice mayor
of Makati City but suspended the proclamation of the
winner.
On May 19, 1998, petitioner sought to intervene
in the case for disqualification.[4]Petitioners motion
was opposed by private respondent.
The motion was not resolved. Instead, on August
31, 1998, the COMELEC en banc rendered its
resolution. Voting 4 to 1, with one commissioner
abstaining, the COMELEC en banc reversed the ruling
of its Second Division and declared private respondent
qualified to run for vice mayor of the City of Makati in
the May 11, 1998 elections.[5] The pertinent portions
of the resolution of the COMELEC en banc read:
As aforesaid, respondent Eduardo Barrios Manzano
was born in San Francisco, California, U.S.A. He
acquired US citizenship by operation of the United
States Constitution and laws under the principle of jus
soli.
He was also a natural born Filipino citizen by
operation of the 1935 Philippine Constitution, as his
father and mother were Filipinos at the time of his
birth. At the age of six (6), his parents brought him to
the Philippines using an American passport as travel
document. His parents also registered him as an alien
with the Philippine Bureau of Immigration. He was
issued an alien certificate of registration. This,
however, did not result in the loss of his Philippine
citizenship, as he did not renounce Philippine
citizenship and did not take an oath of allegiance to
the United States.
It is an undisputed fact that when respondent attained
the age of majority, he registered himself as a voter,
and voted in the elections of 1992, 1995 and 1998,
which effectively renounced his US citizenship under
American law. Under Philippine law, he no longer had
U.S. citizenship.
At the time of the May 11, 1998 elections, the
resolution of the Second Division, adopted on May 7,
1998, was not yet final. Respondent Manzano obtained
the highest number of votes among the candidates for
vice-mayor of Makati City, garnering one hundred
three thousand eight hundred fifty three (103,853)
votes over his closest rival, Ernesto S. Mercado, who
obtained one hundred thousand eight hundred ninety
four (100,894) votes, or a margin of two thousand
nine hundred fifty nine (2,959) votes.Gabriel Daza III
obtained third place with fifty four thousand two
hundred seventy five (54,275) votes. In applying
election laws, it would be far better to err in favor of
the popular choice than be embroiled in complex legal
issues involving private international law which may
well be settled before the highest court (Cf. Frivaldo
vs. Commission on Elections, 257 SCRA 727).
WHEREFORE, the Commission en banc hereby
REVERSES the resolution of the Second Division,
adopted on May 7, 1998, ordering the cancellation of
the respondents certificate of candidacy.
We declare respondent Eduardo Luis Barrios Manzano
to be QUALIFIED as a candidate for the position of
vice-mayor of Makati City in the May 11, 1998,
elections.
ACCORDINGLY, the Commission directs the Makati
City Board of Canvassers, upon proper notice to the
parties, to reconvene and proclaim the respondent
Eduardo Luis Barrios Manzano as the winning
candidate for vice-mayor of Makati City.
Pursuant to the resolution of the COMELEC en
banc, the board of canvassers, on the evening of
August 31, 1998, proclaimed private respondent as
vice mayor of the City of Makati.
This is a petition for certiorari seeking to set
aside the aforesaid resolution of the COMELEC en banc
and to declare private respondent disqualified to hold
128
the office of vice mayor of Makati City. Petitioner
contends that
[T]he COMELEC en banc ERRED in holding that:
A. Under Philippine law, Manzano was no longer a U.S.
citizen when he:
1. He renounced his U.S. citizenship when he attained
the age of majority when he was already 37 years old;
and,
2. He renounced his U.S. citizenship when he (merely)
registered himself as a voter and voted in the elections
of 1992, 1995 and 1998.
B. Manzano is qualified to run for and or hold the
elective office of Vice-Mayor of the City of Makati;
C. At the time of the May 11, 1998 elections, the
resolution of the Second Division adopted on 7 May
1998 was not yet final so that, effectively, petitioner
may not be declared the winner even assuming that
Manzano is disqualified to run for and hold the
elective office of Vice-Mayor of the City of Makati.
We first consider the threshold procedural issue
raised by private respondent Manzano whether
petitioner Mercado has personality to bring this suit
considering that he was not an original party in the
case for disqualification filed by Ernesto Mamaril nor
was petitioners motion for leave to intervene granted.
I. PETITIONER'S RIGHT TO BRING THIS SUIT
Private respondent cites the following provisions
of Rule 8 of the Rules of Procedure of the COMELEC in
support of his claim that petitioner has no right to
intervene and, therefore, cannot bring this suit to set
aside the ruling denying his motion for intervention:
Section 1. When proper and when may be permitted to
intervene. Any person allowed to initiate an action or
proceeding may, before or during the trial of an action
or proceeding, be permitted by the Commission, in its
discretion to intervene in such action or proceeding, if
he has legal interest in the matter in litigation, or in
the success of either of the parties, or an interest
against both, or when he is so situated as to be
adversely affected by such action or proceeding.
....
Section 3. Discretion of Commission. In allowing or
disallowing a motion for intervention, the Commission
or the Division, in the exercise of its discretion, shall
consider whether or not the intervention will unduly
delay or prejudice the adjudication of the rights of the
original parties and whether or not the intervenors
rights may be fully protected in a separate action or
proceeding.
Private respondent argues that petitioner has neither
legal interest in the matter in litigation nor an interest
to protect because he is a defeated candidate for the
vice-mayoralty post of Makati City [who] cannot be
proclaimed as the Vice-Mayor of Makati City even if
the private respondent be ultimately disqualified by
final and executory judgment.
The flaw in this argument is it assumes that, at
the time petitioner sought to intervene in the
proceedings before the COMELEC, there had already
been a proclamation of the results of the election for
the vice mayoralty contest for Makati City, on the basis
of which petitioner came out only second to private
respondent. The fact, however, is that there had been
no proclamation at that time. Certainly, petitioner had,
and still has, an interest in ousting private respondent
from the race at the time he sought to intervene. The
rule in Labo v. COMELEC,[6] reiterated in several
cases,[7]only applies to cases in which the election of
the respondent is contested, and the question is
whether one who placed second to the disqualified
candidate may be declared the winner. In the present
case, at the time petitioner filed a Motion for Leave to
File Intervention on May 20, 1998, there had been no
proclamation of the winner, and petitioners purpose
was precisely to have private respondent disqualified
from running for [an] elective local position under
40(d) of R.A. No. 7160. If Ernesto Mamaril (who
originally instituted the disqualification proceedings),
a registered voter of Makati City, was competent to
bring the action, so was petitioner since the latter was
a rival candidate for vice mayor of Makati City.
Nor is petitioners interest in the matter in
litigation any less because he filed a motion for
intervention only on May 20, 1998, after private
respondent had been shown to have garnered the
highest number of votes among the candidates for vice
mayor. That petitioner had a right to intervene at that
stage of the proceedings for the disqualification
against private respondent is clear from 6 of R.A. No.
6646, otherwise known as the Electoral Reforms Law
of 1987, which provides:
Any candidate who has been declared by final
judgment to be disqualified shall not be voted for, and
the votes cast for him shall not be counted. If for any
reason a candidate is not declared by final judgment
before an election to be disqualified and he is voted for
and receives the winning number of votes in such
election, the Court or Commission shall continue with
the trial and hearing of the action, inquiry, or protest
and, upon motion of the complainant or
any intervenor, may during the pendency thereof
order the suspension of the proclamation of such
candidate whenever the evidence of guilt is strong.
Under this provision, intervention may be
allowed in proceedings for disqualification even after
election if there has yet been no final judgment
rendered.
The failure of the COMELEC en banc to resolve
petitioners motion for intervention was tantamount to
a denial of the motion, justifying petitioner in filing the
instant petition for certiorari. As the COMELEC en
banc instead decided the merits of the case, the
present petition properly deals not only with the
denial of petitioners motion for intervention but also
with the substantive issues respecting private
respondents alleged disqualification on the ground of
dual citizenship.
129
 This brings us to the next question, namely,
whether private respondent Manzano possesses dual
citizenship and, if so, whether he is disqualified from
being a candidate for vice mayor of Makati City.
II. DUAL CITIZENSHIP AS A GROUND FOR DISQUALIFICATION
The disqualification of private respondent
Manzano is being sought under 40 of the Local
Government Code of 1991 (R.A. No. 7160), which
declares as disqualified from running for any elective
local position: . . . (d) Those with dual citizenship. This
provision is incorporated in the Charter of the City of
Makati.[8]
Invoking the maxim dura lex sed lex, petitioner, as
well as the Solicitor General, who sides with him in
this case, contends that through 40(d) of the Local
Government Code, Congress has command[ed] in
explicit terms the ineligibility of persons possessing
dual allegiance to hold local elective office.
To begin with, dual citizenship is different from
dual allegiance. The former arises when, as a result of
the concurrent application of the different laws of two
or more states, a person is simultaneously considered
a national by the said states.[9] For instance, such a
situation may arise when a person whose parents are
citizens of a state which adheres to the principle of jus
sanguinis is born in a state which follows the doctrine
of jus soli. Such a person, ipso facto and without any
voluntary act on his part, is concurrently considered a
citizen of both states. Considering the citizenship
clause (Art. IV) of our Constitution, it is possible for
the following classes of citizens of the Philippines to
possess dual citizenship:
(1) Those born of Filipino fathers and/or
mothers in foreign countries which follow the
principle of jus soli;
(2) Those born in the Philippines of Filipino
mothers and alien fathers if by the laws of their fathers
country such children are citizens of that country;
(3) Those who marry aliens if by the laws of the
latters country the former are considered citizens,
unless by their act or omission they are deemed to
have renounced Philippine citizenship.
There may be other situations in which a citizen
of the Philippines may, without performing any act, be
also a citizen of another state; but the above cases are
clearly possible given the constitutional provisions on
citizenship.
Dual allegiance, on the other hand, refers to the
situation in which a person simultaneously owes, by
some positive act, loyalty to two or more states. While
dual citizenship is involuntary, dual allegiance is the
result of an individuals volition.
With respect to dual allegiance, Article IV, 5 of the
Constitution provides: Dual allegiance of citizens is
inimical to the national interest and shall be dealt with
by law.This provision was included in the 1987
Constitution at the instance of Commissioner Blas F.
Ople who explained its necessity as follows:[10]
. . . I want to draw attention to the fact that dual
allegiance is not dual citizenship. I have circulated a
memorandum to the Bernas Committee according to
which a dual allegiance and I reiterate a dual
allegiance is larger and more threatening than that
of mere double citizenship which is seldom intentional
and, perhaps, never insidious.That is often a function
of the accident of mixed marriages or of birth on
foreign soil.And so, I do not question double
citizenship at all.
What we would like the Committee to consider is to
take constitutional cognizance of the problem of dual
allegiance. For example, we all know what happens in
the triennial elections of the Federation of Filipino-
Chinese Chambers of Commerce which consists of
about 600 chapters all over the country. There is a
Peking ticket, as well as a Taipei ticket. Not widely
known is the fact that the Filipino-Chinese community
is represented in the Legislative Yuan of the Republic
of China in Taiwan. And until recently, the sponsor
might recall, in Mainland China in the Peoples
Republic of China, they have the Associated Legislative
Council for overseas Chinese wherein all of Southeast
Asia including some European and Latin countries
were represented, which was dissolved after several
years because of diplomatic friction. At that time, the
Filipino-Chinese were also represented in that
Overseas Council.
When I speak of double allegiance, therefore, I speak
of this unsettled kind of allegiance of Filipinos, of
citizens who are already Filipinos but who, by their
acts, may be said to be bound by a second allegiance,
either to Peking or Taiwan. I also took close note of the
concern expressed by some Commissioners yesterday,
including Commissioner Villacorta, who were
concerned about the lack of guarantees of thorough
assimilation, and especially Commissioner Concepcion
who has always been worried about minority claims
on our natural resources.
Dual allegiance can actually siphon scarce national
capital to Taiwan, Singapore, China or Malaysia, and
this is already happening. Some of the great
commercial places in downtown Taipei are Filipino-
owned, owned by Filipino-Chinese it is of common
knowledge in Manila. It can mean a tragic capital
outflow when we have to endure a capital famine
which also means economic stagnation, worsening
unemployment and social unrest.
And so, this is exactly what we ask that the Committee
kindly consider incorporating a new section, probably
Section 5, in the article on Citizenship which will read
as follows:DUAL ALLEGIANCE IS INIMICAL TO
CITIZENSHIP AND SHALL BE DEALT WITH
ACCORDING TO LAW.
In another session of the Commission, Ople spoke
on the problem of these citizens with dual allegiance,
thus:[11]
. . . A significant number of Commissioners expressed
their concern about dual citizenship in the sense that it
implies a double allegiance under a double sovereignty
which some of us who spoke then in a freewheeling
debate thought would be repugnant to the sovereignty
which pervades the Constitution and to citizenship
itself which implies a uniqueness and which elsewhere
in the Constitution is defined in terms of rights and
130
obligations exclusive to that citizenship including, of
course, the obligation to rise to the defense of the State
when it is threatened, and back of this, Commissioner
Bernas, is, of course, the concern for national
security. In the course of those debates, I think some
noted the fact that as a result of the wave of
naturalizations since the decision to establish
diplomatic relations with the Peoples Republic of
China was made in 1975, a good number of these
naturalized Filipinos still routinely go to Taipei every
October 10; and it is asserted that some of them do
renew their oath of allegiance to a foreign government
maybe just to enter into the spirit of the occasion
when the anniversary of the Sun Yat-Sen Republic is
commemorated. And so, I have detected a genuine and
deep concern about double citizenship, with its
attendant risk of double allegiance which is repugnant
to our sovereignty and national security. I appreciate
what the Committee said that this could be left to the
determination of a future legislature.But considering
the scale of the problem, the real impact on the
security of this country, arising from, let us say,
potentially great numbers of double citizens
professing double allegiance, will the Committee
entertain a proposed amendment at the proper time
that will prohibit, in effect, or regulate double
citizenship?
Clearly, in including 5 in Article IV on citizenship,
the concern of the Constitutional Commission was not
with dual citizens per se but with naturalized citizens
who maintain their allegiance to their countries of
origin even after their naturalization. Hence, the
phrase dual citizenship in R.A. No. 7160, 40(d) and in
R.A. No. 7854, 20 must be understood as referring to
dual allegiance. Consequently, persons with mere dual
citizenship do not fall under this
disqualification. Unlike those with dual allegiance, who
must, therefore, be subject to strict process with
respect to the termination of their status, for
candidates with dual citizenship, it should suffice if,
upon the filing of their certificates of candidacy, they
elect Philippine citizenship to terminate their status as
persons with dual citizenship considering that their
condition is the unavoidable consequence of
conflicting laws of different states. As Joaquin G.
Bernas, one of the most perceptive members of the
Constitutional Commission, pointed out: [D]ual
citizenship is just a reality imposed on us because we
have no control of the laws on citizenship of other
countries. We recognize a child of a Filipino
mother. But whether or not she is considered a citizen
of another country is something completely beyond
our control.[12]
By electing Philippine citizenship, such
candidates at the same time forswear allegiance to the
other country of which they are also citizens and
thereby terminate their status as dual citizens. It may
be that, from the point of view of the foreign state and
of its laws, such an individual has not effectively
renounced his foreign citizenship.That is of no
moment as the following discussion on 40(d) between
Senators Enrile and Pimentel clearly shows:[13]
SENATOR ENRILE. Mr. President, I would like to
ask clarification of line 41, page 17: Any
person with dual citizenship is disqualified to
run for any elective local position. Under the
present Constitution, Mr. President, someone
whose mother is a citizen of the Philippines
but his father is a foreigner is a natural-born
citizen of the Republic. There is no
requirement that such a natural born citizen,
upon reaching the age of majority, must elect
or give up Philippine citizenship.
On the assumption that this person would carry
two passports, one belonging to the country of
his or her father and one belonging to the
Republic of the Philippines, may such a
situation disqualify the person to run for a
local government position?
SENATOR PIMENTEL. To my mind, Mr. President, it
only means that at the moment when he
would want to run for public office, he has to
repudiate one of his citizenships.
SENATOR ENRILE. Suppose he carries only a
Philippine passport but the country of origin
or the country of the father claims that
person, nevertheless, as a citizen? No one can
renounce. There are such countries in the
world.
SENATOR PIMENTEL. Well, the very fact that he is
running for public office would, in effect, be an
election for him of his desire to be considered
as a Filipino citizen.
SENATOR ENRILE. But, precisely, Mr. President,
the Constitution does not require an
election. Under the Constitution, a person
whose mother is a citizen of the Philippines is,
at birth, a citizen without any overt act to
claim the citizenship.
SENATOR PIMENTEL. Yes. What we are saying, Mr.
President, is: Under the Gentlemans example,
if he does not renounce his other citizenship,
then he is opening himself to question. So, if
he is really interested to run, the first thing he
should do is to say in the Certificate of
Candidacy that: I am a Filipino citizen, and I
have only one citizenship.
SENATOR ENRILE. But we are talking from the
viewpoint of Philippine law, Mr. President.He
will always have one citizenship, and that is
the citizenship invested upon him or her in
the Constitution of the Republic.
SENATOR PIMENTEL. That is true, Mr.
President. But if he exercises acts that will
prove that he also acknowledges other
citizenships, then he will probably fall under
this disqualification.
This is similar to the requirement that an
applicant for naturalization must renounce all
allegiance and fidelity to any foreign prince, potentate,
state, or sovereignty[14] of which at the time he is a
subject or citizen before he can be issued a certificate
of naturalization as a citizen of the
Philippines. In Parado v. Republic,[15] it was held:
[W]hen a person applying for citizenship by
naturalization takes an oath that he renounces his
loyalty to any other country or government and
solemnly declares that he owes his allegiance to the
Republic of the Philippines, the condition imposed by
law is satisfied and complied with. The determination
whether such renunciation is valid or fully complies
131
with the provisions of our Naturalization Law lies
within the province and is an exclusive prerogative of
our courts. The latter should apply the law duly
enacted by the legislative department of the
Republic. No foreign law may or should interfere with
its operation and application. If the requirement of the
Chinese Law of Nationality were to be read into our
Naturalization Law, we would be applying not what
our legislative department has deemed it wise to
require, but what a foreign government has thought or
intended to exact. That, of course, is absurd. It must be
resisted by all means and at all cost. It would be a
brazen encroachment upon the sovereign will and
power of the people of this Republic.
III. PETITIONER'S ELECTION OF PHILIPPINE CITIZENSHIP
The record shows that private respondent was
born in San Francisco, California on September 4,
1955, of Filipino parents. Since the Philippines
adheres to the principle of jus sanguinis, while the
United States follows the doctrine of jus soli, the
parties agree that, at birth at least, he was a national
both of the Philippines and of the United
States.However, the COMELEC en banc held that, by
participating in Philippine elections in 1992, 1995, and
1998, private respondent effectively renounced his
U.S. citizenship under American law, so that now he is
solely a Philippine national.
Petitioner challenges this ruling. He argues that
merely taking part in Philippine elections is not
sufficient evidence of renunciation and that, in any
event, as the alleged renunciation was made when
private respondent was already 37 years old, it was
ineffective as it should have been made when he
reached the age of majority.
In holding that by voting in Philippine elections
private respondent renounced his American
citizenship, the COMELEC must have in mind 349 of
the Immigration and Nationality Act of the United
States, which provided that A person who is a national
of the United States, whether by birth or
naturalization, shall lose his nationality by: . . . (e)
Voting in a political election in a foreign state or
participating in an election or plebiscite to determine
the sovereignty over foreign territory. To be sure this
provision was declared unconstitutional by the U.S.
Supreme Court in Afroyim v. Rusk[16] as beyond the
power given to the U.S. Congress to regulate foreign
relations. However, by filing a certificate of candidacy
when he ran for his present post, private respondent
elected Philippine citizenship and in effect renounced
his American citizenship. Private respondents
certificate of candidacy, filed on March 27, 1998,
contained the following statements made under oath:
6. I AM A FILIPINO CITIZEN (STATE IF
NATURAL-BORN OR
NATURALIZED)NATURAL-BORN
....
10. I AM A REGISTERED VOTER OF
PRECINCT NO. 747-A, BARANGAY SAN
LORENZO, CITY/MUNICIPALITY
OF MAKATI, PROVINCE OF NCR .
11. I AM NOT A PERMANENT RESIDENT OF,
OR IMMIGRANT TO, A FOREIGN
COUNTRY.
12. I AM ELIGIBLE FOR THE OFFICE I SEEK
TO BE ELECTED. I WILL SUPPORT AND
DEFEND THE CONSTITUTION OF THE
PHILIPPINES AND WILL MAINTAIN
TRUE FAITH AND ALLEGIANCE
THERETO; THAT I WILL OBEY THE
LAWS, LEGAL ORDERS AND DECREES
PROMULGATED BY THE DULY
CONSTITUTED AUTHORITIES OF THE
REPUBLIC OF THE PHILIPPINES; AND
THAT I IMPOSE THIS OBLIGATION UPON
MYSELF VOLUNTARILY, WITHOUT
MENTAL RESERVATION OR PURPOSE
OF EVASION. I HEREBY CERTIFY THAT
THE FACTS STATED HEREIN ARE TRUE
AND CORRECT OF MY OWN PERSONAL
KNOWLEDGE.
The filing of such certificate of candidacy sufficed
to renounce his American citizenship, effectively
removing any disqualification he might have as a dual
citizen.Thus, in Frivaldo v. COMELEC it was held:[17]
It is not disputed that on January 20, 1983 Frivaldo
became an American. Would the retroactivity of his
repatriation not effectively give him dual citizenship,
which under Sec. 40 of the Local Government Code
would disqualify him from running for any elective
local position? We answer this question in the
negative, as there is cogent reason to hold that
Frivaldo was really STATELESS at the time he took
said oath of allegiance and even before that, when he
ran for governor in 1988. In his Comment, Frivaldo
wrote that he had long renounced and had long
abandoned his American citizenship long before May
8, 1995. At best, Frivaldo was stateless in the
interim when he abandoned and renounced his US
citizenship but before he was repatriated to his
Filipino citizenship.
On this point, we quote from the assailed Resolution
dated December 19, 1995:
By the laws of the United States, petitioner Frivaldo
lost his American citizenship when he took his oath of
allegiance to the Philippine Government when he ran
for Governor in 1988, in 1992, and in 1995. Every
certificate of candidacy contains an oath of allegiance
to the Philippine Government.
These factual findings that Frivaldo has lost his foreign
nationality long before the elections of 1995 have not
been effectively rebutted by Lee. Furthermore, it is
basic that such findings of the Commission are
conclusive upon this Court, absent any showing of
capriciousness or arbitrariness or abuse.
There is, therefore, no merit in petitioners
contention that the oath of allegiance contained in
private respondents certificate of candidacy is
insufficient to constitute renunciation of his American
citizenship. Equally without merit is petitioners
contention that, to be effective, such renunciation
should have been made upon private respondent
reaching the age of majority since no law requires the
132
election of Philippine citizenship to be made upon
majority age.
Finally, much is made of the fact that private
respondent admitted that he is registered as an
American citizen in the Bureau of Immigration and
Deportation and that he holds an American passport
which he used in his last travel to the United States on
April 22, 1997. There is no merit in this. Until the filing
of his certificate of candidacy on March 21, 1998, he
had dual citizenship. The acts attributed to him can be
Davide, Jr., C.J., Romero, Bellosillo, Melo, Puno,
Vitug, Kapunan, Quisumbing, Buena, Gonzaga-
Reyes, and Ynares-Santiago, JJ., concur.
Panganiban, and Purisima, JJ., on leave.
Pardo, J., no part.
[1] Petition, Rollo, p. 5.
Per Commissioner Amado M. Calderon and
[2]

considered simply as the assertion of his American concurred in by Commissioners Julio F. Desamito and
nationality before the termination of his American Japal M. Guiani.
citizenship. What this Court said in Aznar v.
COMELEC[18] appliesmutatis mutandis to private
[3] Id., Annex E, Rollo, pp. 50-63.
respondent in the case at bar: [4] Rollo, pp. 78-83.

. . . Considering the fact that admittedly Osmea was Per Chairman Bernardo P. Pardo and concurred in
[5]

both a Filipino and an American, the mere fact that he
has a Certificate stating he is an American does not
mean that he is not still a Filipino. . . . [T]he
Certification that he is an American does not mean
that he is not still a Filipino, possessed as he is, of both
nationalities or citizenships. Indeed, there is no
by Commissioners Manolo B. Gorospe, Teresita Dy-
Liaco Flores, Japal M. Guiani, and Luzviminda G.
Tancangco. Commissioner Julio F. Desamito dissented.
[6] 176 SCRA 1 (1989).
Abella v. COMELEC, 201 SCRA 253 (1991); Benito v.
[7]

express renunciation here of Philippine citizenship;
truth to tell, there is even no implied renunciation of
said citizenship. When We consider that the
renunciation needed to lose Philippine citizenship
must be express, it stands to reason that there can be
no such loss of Philippine citizenship when there is no
renunciation, either express or implied.
To recapitulate, by declaring in his certificate of
COMELEC, 235 SCRA 436 (1994); Aquino v. COMELEC,
248 SCRA 400 (1995); Frivaldo v. COMELEC, 257 SCRA
727 (1996).
R.A. No. 7854, the Charter of the City of Makati,
[8]
provides: Sec. 20 The following are disqualifiedfrom
running for any elective position in the city: . . . (d)
Those with dual citizenship.
JOVITO R. SALONGA, PRIVATE INTERNATIONAL
[9]

candidacy that he is a Filipino citizen; that he is not a LAW 166 (1995).

permanent resident or immigrant of another country; [10] Id., at 361 (Session of July 8, 1986).
that he will defend and support the Constitution of the
Philippines and bear true faith and allegiance thereto [11] Id., at 233-234 (Session of June 25, 1986).
and that he does so without mental reservation,
private respondent has, as far as the laws of this 1
[12] RECORD OF THE CONSTITUTIONAL
country are concerned, effectively repudiated his COMMISSION 203 (Session of June 23, 1986).
American citizenship and anything which he may have [13] Transcript, pp. 5-6, Session of Nov. 27, 1990.
said before as a dual citizen.
[14] C.A. No. 473, 12.
On the other hand, private respondents oath of
allegiance to the Philippines, when considered with [15] 86 Phil. 340, 343 (1950).
the fact that he has spent his youth and adulthood,
received his education, practiced his profession as an 387 U.S. 253, 18 L. Ed. 2d 757 (1967), overruling
[16]

artist, and taken part in past elections in this country, Perez v. Brownell, 356 U.S. 2 L. Ed. 2d 603 (1958).
leaves no doubt of his election of Philippine [17] 257 SCRA 727, 759-760 (1996).
citizenship.
185 SCRA 703, 711 (1990). See also Kawakita v.
[18]
His declarations will be taken upon the faith that United States, 343 U.S. 717, 96 L. Ed. 1249 (1952).
he will fulfill his undertaking made under oath. Should
he betray that trust, there are enough sanctions for [19] 169 SCRA 364 (1989).
declaring the loss of his Philippine citizenship through
expatriation in appropriate proceedings. In Yu v.
Defensor-Santiago,[19] we sustained the denial of entry
into the country of petitioner on the ground that, after G.R. No. 199113
taking his oath as a naturalized citizen, he applied for
the renewal of his Portuguese passport and declared RENATO M. DAVID, Petitioner,
in commercial documents executed abroad that he vs.
was a Portuguese national. A similar sanction can be EDITHA A. AGBAY and PEOPLE OF THE
taken against any one who, in electing Philippine PHILIPPINES, Respondents.
citizenship, renounces his foreign nationality, but
subsequently does some act constituting renunciation DECISION
of his Philippine citizenship.
WHEREFORE, the petition for certiorari is VILLARAMA, JR., J.:
DISMISSED for lack of merit.
This is a petition for review under Rule 45 seeking to
SO ORDERED.
reverse the Order1 dated October 8, 2011 of the

133
Regional Trial Court (RTC) of Pinamalayan, Oriental
Mindoro, which denied the petition for certiorari filed
by Renato(petitioner)M. David. Petitioner assailed the
Order2 dated March 22, 2011 of the Municipal Trial
Court (MTC) of Socorro, Oriental Mindoro denying his
motion for redetermination of probable cause.
The factual antecedents:
In 1974, petitioner migrated to Canada where he
became a Canadian citizen by naturalization. Upon
their retirement, petitioner and his wife returned to
the Philippines. Sometime in 2000, they purchased a
600-square meter lot along the beach in Tambong,
Gloria, Oriental Mindoro where they constructed a
residential house. However, in the year 2004, they
came to know that the portion where they built their
house is public land and part of the salvage zone.
On April 12, 2007, petitioner filed a Miscellaneous
Lease Application3 (MLA) over the subject land with
the Department of Environment and Natural
Resources (DENR) at the Community Environment
and Natural Resources Office (CENRO) in Socorro. In
the said application, petitioner indicated that he is a
Filipino citizen.
Private respondent Editha A. Agbay opposed the
application on the ground that petitioner, a Canadian
citizen, is disqualified to own land. She also filed a
criminal complaint for falsification of public
documents under Article 172 of the Revised Penal
Code (RPC) (I.S. No. 08-6463) against the petitioner.
Meanwhile, petitioner re-acquired his Filipino
citizenship under the provisions of Republic Act No.
9225,4 (R.A. 9225) as evidenced by Identification
Certificate No. 266-10-075 issued by the Consulate
General of the Philippines (Toronto) on October 11,
2007.
In his defense, petitioner averred that at the time he
filed his application, he had intended to re-acquire
Philippine citizenship and that he had been assured by
a CENRO officer that he could declare himself as a
Filipino. He further alleged that he bought the
property from the Agbays who misrepresented to him
that the subject property was titled land and they have
the right and authority to convey the same. The
dispute had in fact led to the institution of civil and
criminal suits between him and private respondent’s
family.
On January 8, 2008,6 the Office of the Provincial
Prosecutor issued its Resolution7 finding probable
cause to indict petitioner for violation of Article 172 of
the RPC and recommending the filing of the
corresponding information in court. Petitioner
challenged the said resolution in a petition for review
he filed before the Department of Justice (DOJ).
On June 3, 2008, the CENRO issued an order rejecting
petitioner’s MLA. It ruled that petitioner’s subsequent
re-acquisition of Philippine citizenship did not cure
the defect in his MLA which was void ab initio.8
In the meantime, on July 26, 2010, the petition for
review filed by petitioner was denied by the DOJ
which held that the presence of the elements of the
crime of falsification of public document suffices to
warrant indictment of the petitioner notwithstanding
the absence of any proof that he gained or intended to
injure a third person in committing the act of
falsification.9 Consequently, an information for
Falsification of Public Document was filed before the
MTC (Criminal Case No. 2012) and a warrant of arrest
was issued against the petitioner.
On February 11, 2011, after the filing of the
Information and before his arrest, petitioner filed an
Urgent Motion for Re-Determination of Probable
Cause10 in the MTC. Interpreting the provisions of the
law relied upon by petitioner, the said court denied
the motion, holding that R.A. 9225 makes a distinction
between those who became foreign citizens during its
effectivity, and those who lost their Philippine
citizenship before its enactment when the governing
law was Commonwealth Act No. 6311 (CA 63). Since
the crime for which petitioner was charged was
alleged and admitted to have been committed on April
12, 2007 before he had re- acquired his Philippine
citizenship, the MTC concluded that petitioner was at
that time still a Canadian citizen. Thus, the MTC
ordered:
WHEREFORE, for lack of jurisdiction over the person
of the accused, and for lack of merit, the motion
is DENIED.
SO ORDERED.12
In his motion for reconsideration,13 petitioner
questioned the foregoing order denying him relief on
the ground of lack of jurisdiction and insisted that the
issue raised is purely legal. He argued that since his
application had yet to receive final evaluation and
action by the DENR Region IV-B office in Manila, it is
academic to ask the citizenship of the applicant
(petitioner) who had re-acquired Philippine
citizenship six months after he applied for lease of
public land. The MTC denied the motion for
reconsideration.14
Dissatisfied, petitioner elevated the case to the RTC via
a petition15 for certiorari under Rule 65, alleging grave
abuse of discretion on the part of the MTC. He asserted
that first, jurisdiction over the person of an accused
cannot be a pre-condition for the re-determination of
probable cause by the court that issues a warrant of
arrest; and second, the March 22, 2011 Order
disregarded the legal fiction that once a natural-born
Filipino citizen who had been naturalized in another
country re-acquires his citizenship under R.A. 9225,
his Filipino citizenship is thus deemed not to have
been lost on account of said naturalization.
In his Comment and Opposition,16 the prosecutor
emphasized that the act of falsification was already
consummated as petitioner has not yet re-acquired his
Philippine citizenship, and his subsequent oath to re-
acquire Philippine citizenship will only affect his
citizenship status and not his criminal act which was
long consummated prior to said oath of allegiance.
On October 8, 2011, the RTC issued the assailed Order
denying the petition for certiorari after finding no
134
grave abuse of discretion committed by the lower
court, thus:
ACCORDINGLY, the petition is hereby DENIED. At any
rate petitioner is not left without any remedy or
recourse because he can proceed to trial where he can
make use of his claim to be a Filipino citizen as his
defense to be adjudicated in a full blown trial, and in
case of conviction, to appeal such conviction.
SO ORDERED.17
Petitioner is now before us arguing that –
A. By supporting the prosecution of the
petitioner for falsification, the lower court has
disregarded the undisputed fact that
petitioner is a natural-born Filipino citizen,
and that by re-acquiring the same status
under R.A. No. 9225 he was by legal fiction
"deemed not to have lost" it at the time of his
naturalization in Canada and through the time
when he was said to have falsely claimed
Philippine citizenship.
B. By compelling petitioner to first return
from his legal residence in Canada and to
surrender or allow himself to be arrested
under a warrant for his alleged false claim to
Philippine citizenship, the lower court has
pre-empted the right of petitioner through his
wife and counsel to question the validity of
the said warrant of arrest against him before
the same is implemented, which is
tantamount to a denial of due process.18
In his Comment, the Solicitor General contends that
petitioner’s argument regarding the retroactivity of
R.A. 9225 is without merit.1âwphi1 It is contended
that this Court’s rulings in Frivaldo v. Commission on
Elections19 and Altarejos v. Commission on
Elections20 on the retroactivity of one’s re- acquisition
of Philippine citizenship to the date of filing his
application therefor cannot be applied to the case of
herein petitioner. Even assuming for the sake of
argument that such doctrine applies in the present
situation, it will still not work for petitioner’s cause for
the simple reason that he had not alleged, much less
proved, that he had already applied for reacquisition
of Philippine citizenship before he made the
declaration in the Public Land Application that he is a
Filipino. Moreover, it is stressed that in falsification of
public document, it is not necessary that the idea of
gain or intent to injure a third person be present. As to
petitioner’s defense of good faith, such remains to be a
defense which may be properly raised and proved in a
full- blown trial.
On the issue of jurisdiction over the person of accused
(petitioner), the Solicitor General opines that in
seeking an affirmative relief from the MTC when he
filed his Urgent Motion for Re-determination of
Probable Cause, petitioner is deemed to have
submitted his person to the said court’s jurisdiction by
his voluntary appearance. Nonetheless, the RTC
correctly ruled that the lower court committed no
grave abuse of discretion in denying the petitioner’s
motion after a judicious, thorough and personal
evaluation of the parties’ arguments contained in their
respective pleadings, and the evidence submitted
before the court.
In sum, the Court is asked to resolve whether (1)
petitioner may be indicted for falsification for
representing himself as a Filipino in his Public Land
Application despite his subsequent re-acquisition of
Philippine citizenship under the provisions of R.A.
9225; and (2) the MTC properly denied petitioner’s
motion for re-determination of probable cause on the
ground of lack of jurisdiction over the person of the
accused (petitioner).
R.A. 9225, otherwise known as the "Citizenship
Retention and Re- acquisition Act of 2003," was signed
into law by President Gloria Macapagal-Arroyo on
August 29, 2003. Sections 2 and 3 of said law read:
SEC. 2. Declaration of Policy.–It is hereby declared the
policy of the State that all Philippine citizens who
become citizens of another country shall be deemed
not to have lost their Philippine citizenship under
the conditions of this Act.
SEC. 3. Retention of Philippine Citizenship.–Any
provision of law to the contrary notwithstanding,
natural-born citizens of the Philippines who have lost
their Philippine citizenship by reason of their
naturalization as citizens of a foreign country are
hereby deemed to have reacquired Philippine
citizenship upon taking the following oath of
allegiance to the Republic:
"I ______________________, solemnly swear (or affirm) that
I will support and defend the Constitution of the
Republic of the Philippines and obey the laws and legal
orders promulgated by the duly constituted
authorities of the Philippines; and I hereby declare
that I recognize and accept the supreme authority of
the Philippines and will maintain true faith and
allegiance thereto; and that I impose this obligation
upon myself voluntarily without mental reservation or
purpose of evasion."
Natural-born citizens of the Philippines who, after the
effectivity of this Act, become citizens of a foreign
country shall retain their Philippine citizenship
upon taking the aforesaid oath. (Emphasis supplied)
While Section 2 declares the general policy that
Filipinos who have become citizens of another country
shall be deemed "not to have lost their Philippine
citizenship," such is qualified by the phrase "under the
conditions of this Act." Section 3 lays down such
conditions for two categories of natural-born Filipinos
referred to in the first and second paragraphs. Under
the first paragraph are those natural-born Filipinos
who have lost their citizenship by naturalization in a
foreign country who shall re-acquire their Philippine
citizenship upon taking the oath of allegiance to the
Republic of the Philippines. The second paragraph
covers those natural-born Filipinos who became
foreign citizens after R.A. 9225 took effect, who
shall retain their Philippine citizenship upon taking
the same oath. The taking of oath of allegiance is
required for both categories of natural-born Filipino
citizens who became citizens of a foreign country, but
the terminology used is different, "re-acquired" for the
first group, and "retain" for the second group.
135
The law thus makes a distinction between those
natural-born Filipinos who became foreign citizens
before and after the effectivity of R.A. 9225. Although
the heading of Section 3 is "Retention of Philippine
Citizenship", the authors of the law intentionally
employed the terms "re-acquire" and "retain" to
describe the legal effect of taking the oath of allegiance
to the Republic of the Philippines. This is also evident
from the title of the law using both re-acquisition and
retention.
In fine, for those who were naturalized in a foreign
country, they shall be deemed to have re-acquired
their Philippine citizenship which was lost pursuant to
CA 63, under which naturalization in a foreign country
is one of the ways by which Philippine citizenship may
be lost. As its title declares, R.A. 9225 amends CA 63 by
doing away with the provision in the old law which
takes away Philippine citizenship from natural-born
Filipinos who become naturalized citizens of other
countries and allowing dual citizenship,21 and also
provides for the procedure for re-acquiring and
retaining Philippine citizenship. In the case of those
who became foreign citizens after R.A. 9225 took
effect, they shall retain Philippine citizenship despite
having acquired foreign citizenship provided they took
the oath of allegiance under the new law.
Petitioner insists we should not distinguish between
re-acquisition and retention in R.A. 9225. He asserts
that in criminal cases, that interpretation of the law
which favors the accused is preferred because it is
consistent with the constitutional presumption of
innocence, and in this case it becomes more relevant
when a seemingly difficult question of law is expected
to have been understood by the accused, who is a non-
lawyer, at the time of the commission of the alleged
offense. He further cites the letter-reply dated January
31, 201122 of the Bureau of Immigration (BI) to his
query, stating that his status as a natural-born Filipino
will be governed by Section 2 of R.A. 9225.
These contentions have no merit.
That the law distinguishes between re-acquisition and
retention of Philippine citizenship was made clear in
the discussion of the Bicameral Conference Committee
on the Disagreeing Provisions of House Bill No. 4720
and Senate Bill No. 2130 held on August 18, 2003,
where Senator Franklin Drilon was responding to the
query of Representative Exequiel Javier:
REP. JAVIER. I have some questions in Section 3. Here,
under Section 3 of the Senate version, "Any provision
of law on the contrary notwithstanding, natural-born
citizens of the Philippines who, after the effectivity of
this Act, shall… and so forth, ano, shall retain their
Philippine citizenship.
Now in the second paragraph, natural-born citizens
who have lost their citizenship by reason of their
naturalization after the effectivity of this Act are
deemed to have reacquired…
THE CHAIRMAN (SEN. DRILON). Prior to the
effectivity.
REP. JAVIER. Well, you have two kinds of natural-born
citizens here. Natural-born citizens who acquired
foreign citizenship after the effectivity of this act are
considered to have retained their citizenship. But
natural-born citizens who lost their Filipino
citizenship before the effectivity of this act are
considered to have reacquired. May I know the
distinction? Do you mean to say that natural-born
citizens who became, let’s say, American citizens after
the effectivity of this act are considered natural-born?
Now in the second paragraph are the natural-born
citizens who lost their citizenship before the effectivity
of this act are no longer natural born citizens because
they have just reacquired their citizenship. I just want
to know this distinction, Mr. Chairman.
THE CHAIRMAN (SEN. DRILON). The title of the Senate
version is precisely retention and reacquisition. The
reacquisition will apply to those who lost their
Philippine citizenship by virtue of Commonwealth
Act 63.Upon the effectivity -- assuming that we can
agree on this, upon the effectivity of this new measure
amending Commonwealth Act 63, the Filipinos who
lost their citizenship is deemed to have reacquired
their Philippine citizenship upon the effectivity of the
act.
The second aspect is the retention of Philippine
citizenship applying to future instances. So that’s
the distinction.
REP. JAVIER. Well, I’m just asking this question
because we are here making distinctions between
natural-born citizens. Because this is very important
for certain government positions, ‘no, because natural-
born citizens are only qualified for a specific…
THE CHAIRMAN (SEN. DRILON). That is correct.
REP. JAVIER. ...positions under the Constitution and
under the law.
THE CHAIRMAN (SEN. DRILON). Yes. We can get to
that later on. It’s one of the provisions, yes. But just for
purposes of the explanation, Congressman Javier,
that is our conceptualization. Reacquired for those
who previously lost [Filipino citizenship] by virtue
of Commonwealth Act 63, and retention for those
in the future. (Emphasis supplied)
Considering that petitioner was naturalized as a
Canadian citizen prior to the effectivity of R.A. 9225,
he belongs to the first category of natural- born
Filipinos under the first paragraph of Section 3 who
lost Philippine citizenship by naturalization in a
foreign country. As the new law allows dual
citizenship, he was able to re-acquire his Philippine
citizenship by taking the required oath of allegiance.
For the purpose of determining the citizenship of
petitioner at the time of filing his MLA, it is not
necessary to discuss the rulings
in Frivaldo and Altarejos on the retroactivity of such
reacquisition because R.A. 9225 itself treats those of
his category as having already lost Philippine
citizenship, in contradistinction to those natural-born
Filipinos who became foreign citizens after R.A. 9225
came into force. In other words, Section 2 declaring
the policy that considers Filipinos who became foreign
136
citizens as not to have lost their Philippine citizenship,
should be read together with Section 3, the second
paragraph of which clarifies that such policy governs
all cases after the new law’s effectivity.
As to the letter-reply of BI, it simply quoted Section 2
of R.A. 9225 without any reference to Section 3 on the
particular application of reacquisition and retention to
Filipinos who became foreign citizens before and after
the effectivity of R.A. 9225.
Petitioner’s plea to adopt the interpretation most
favorable to the accused is likewise misplaced. Courts
adopt an interpretation more favorable to the accused
following the time-honored principle that penal
statutes are construed strictly against the State and
liberally in favor of the accused.23 R.A. 9225, however,
is not a penal law.
Falsification of documents under paragraph 1, Article
17224 in relation to Article 17125 of the RPC refers to
falsification by a private individual, or a public officer
or employee who did not take advantage of his official
position, of public, private, or commercial documents.
The elements of falsification of documents under
paragraph 1, Article 172 of the RPC are:
(1)that the offender is a private individual or
a public officer or employee who did not take
advantage of his official position;
(2)that he committed any of the acts of
falsification enumerated in Article 171 of the
RPC; and
(3)that the falsification was committed in a
public, official or commercial document.26
Petitioner made the untruthful statement in the MLA, a
public document, that he is a Filipino citizen at the
time of the filing of said application, when in fact he
was then still a Canadian citizen. Under CA 63, the
governing law at the time he was naturalized as
Canadian citizen, naturalization in a foreign country
was among those ways by which a natural-born citizen
loses his Philippine citizenship. While he re-acquired
Philippine citizenship under R.A. 9225 six months
later, the falsification was already a consummated act,
the said law having no retroactive effect insofar as his
dual citizenship status is concerned. The MTC
therefore did not err in finding probable cause for
falsification of public document under Article 172,
paragraph 1.
The MTC further cited lack of jurisdiction over the
person of petitioner accused as ground for denying
petitioner’s motion for re- determination of probable
cause, as the motion was filed prior to his arrest.
However, custody of the law is not required for the
adjudication of reliefs other than an application for
bail.27 In Miranda v. Tuliao,28 which involved a motion
to quash warrant of arrest, this Court discussed the
distinction between custody of the law and
jurisdiction over the person, and held that jurisdiction
over the person of the accused is deemed waived
when he files any pleading seeking an affirmative
relief, except in cases when he invokes the special
jurisdiction of the court by impugning such
jurisdiction over his person. Thus:
In arguing, on the other hand, that jurisdiction over
their person was already acquired by their filing of the
above Urgent Motion, petitioners invoke our
pronouncement, through Justice Florenz D. Regalado,
in Santiago v. Vasquez:
The voluntary appearance of the accused, whereby the
court acquires jurisdiction over his person, is
accomplished either by his pleading to the merits
(such as by filing a motion to quash or other pleadings
requiring the exercise of the court’s jurisdiction
thereover, appearing for arraignment, entering trial)
or by filing bail. On the matter of bail, since the same is
intended to obtain the provisional liberty of the
accused, as a rule the same cannot be posted before
custody of the accused has been acquired by the
judicial authorities either by his arrest or voluntary
surrender.
Our pronouncement in Santiago shows a distinction
between custody of the law and jurisdiction over the
person. Custody of the law is required before the court
can act upon the application for bail, but is not
required for the adjudication of other reliefs sought by
the defendant where the mere application therefor
constitutes a waiver of the defense of lack of
jurisdiction over the person of the accused. Custody of
the law is accomplished either by arrest or voluntary
surrender, while jurisdiction over the person of the
accused is acquired upon his arrest or voluntary
appearance. One can be under the custody of the law
but not yet subject to the jurisdiction of the court over
his person, such as when a person arrested by virtue
of a warrant files a motion before arraignment to
quash the warrant. On the other hand, one can be
subject to the jurisdiction of the court over his person,
and yet not be in the custody of the law, such as when
an accused escapes custody after his trial has
commenced. Being in the custody of the law signifies
restraint on the person, who is thereby deprived of his
own will and liberty, binding him to become obedient
to the will of the law. Custody of the law is literally
custody over the body of the accused. It includes, but
is not limited to, detention.
xxxx
While we stand by our above pronouncement in Pico
insofar as it concerns bail, we clarify that, as a general
rule, one who seeks an affirmative relief is deemed
to have submitted to the jurisdiction of the court.
As we held in the aforecited case of Santiago,
seeking an affirmative relief in court, whether in
civil or criminal proceedings, constitutes
voluntary appearance.
xxxx
To recapitulate what we have discussed so far, in
criminal cases, jurisdiction over the person of the
accused is deemed waived by the accused when he
files any pleading seeking an affirmative relief,
except in cases when he invokes the special
jurisdiction of the court by impugning such
jurisdiction over his person.Therefore, in narrow
cases involving special appearances, an accused can
invoke the processes of the court even though there is
neither jurisdiction over the person nor custody of the
law. However, if a person invoking the special
137
jurisdiction of the court applies for bail, he must first *Designated additional member per Raffle
submit himself to the custody of the law.29 (Emphasis dated March 9, 2015.
supplied)
1Rollo, pp. 26-29. Penned by Presiding Judge
Considering that petitioner sought affirmative relief in Recto A. Calabocal.
filing his motion for re-determination of probable
cause, the MTC clearly erred in stating that it lacked 2Id. at 67-71. Penned by Acting MTC Judge
jurisdiction over his person. Notwithstanding such Benuardo B. Manalo.
erroneous ground stated in the MTC's order, the RTC
correctly ruled that no grave abuse of discretion was 3 Id. at 32.
committed by the MTC in denying the said motion for
lack of merit. 4AN ACT MAKING THE CITIZENSHIP OF
PHILIPPINE CITIZENS WHO ACQUIRE
WHEREFORE, the petition is DENIED. The Order FOREIGN CITIZENSHIP PERMANENT,
dated October 8, 2011 of the Regional Trial Court of AMENDING FOR THE PURPOSE
Pinamalayan, Oriental Mindoro in Civil Case No. SCA- COMMONWEALTH ACT NO. 63, AS AMENDED,
07-11 (Criminal Case No. 2012) is hereby AFFIRMED AND FOR OTHER PURPOSES.
and UPHELD.
5 Rollo, p. 33.
With costs against the petitioner.
6Should be January 8, 2009, id. at 13 & 50;
SO ORDERED. records, pp. 6 &30.

MARTIN S. VILLARAMA, JR. 7 Rollo, pp. 36-38.

Associate Justice
8 Id. at 34-35.
WE CONCUR:
9 Id. at 50-53.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
10 Id. at 54-58.

11AN ACT PROVIDING FOR THE WAYS IN

DIOSDADO M. WHICH PHILIPPINE CITIZENSHIP MAY BE
BIENVENIDO L. REYES
PERALTA LOST OR REACQUIRED, approved on October
Associate Justice
Associate Justice 21, 1936.

ESTELA M. PERLAS-BERNABE* 12 Rollo, p. 71.

Associate Justice
13 Id. at 72-75.
ATTESTATION
14 Id. at 76.
I attest that the conclusions in the above Decision had
been reached in consultation before the case was 15 Records, pp. 1-16.
assigned to the writer of the opinion of the Court's
Division. 16 Id. at 65-67.
PRESBITERO J. VELASCO, JR.
Associate Justice
17 Rollo, p. 29.
Chairperson, Third Division
18 Id. at 16.
CERTIFICATION
19 327 Phil. 521 (1996).
Pursuant to Section 13, Article VIII of the 1987
Constitution and the Division Chairperson's
20 484 Phil. 609 (2004).
Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the 21AASJS (Advocates and Adherents of Social
case was assigned to the writer of the opinion of the Justice for School Teachers and Allied Workers)
Court's Division. v. Datumanong, 551 Phil. 110, 117-118
(2007).
ANTONIO T. CARPIO
Acting Chief Justice 22 Rollo, p. 59.

23People v. Temporada, 594 Phil. 680, 735

(2008), citing People v. Ladjaalam, 395 Phil. 1,
35 (2000).
Footnotes

138
24Art. 172. Falsification by private individuals
and use of falsified documents. – The penalty of
prision correccional in its medium and
maximum periods and a fine of not more than
5,000 pesos shall be imposed upon:
1.Any private individual who shall
commit any of the falsifications
enumerated in the next preceding
article in any public or official
document or letter of exchange or
any other kind of commercial
document; and
2.Any person who, to the damage of a
third party, or with the intent to
cause such damage, shall in any
private document commit any of the
acts of falsification enumerated in the
next preceding article.
Any person who shall knowingly
introduce in evidence in any judicial
proceeding or to the damage of
another or who, with the intent to
cause such damage, shall use any of
the false documents embraced in the
next preceding article, or in any of the
foregoing subdivisions of this article,
shall be punished by the penalty next
lower in degree.
25 ART. 171. Falsification by public officer,
employee or notary or ecclesiastical minister.
— The penalty of prision mayor and a fine not
to exceed 5,000 pesos shall be imposed upon
any public officer, employee, or notary who,
taking advantage of his official position, shall
falsify a document by committing any of the
following acts:
1.Counterfeiting or imitating any
handwriting, signature or rubric;
2.Causing it to appear that persons
have participated in any act or
proceeding when they did not in fact
so participate;
3.Attributing to persons who have
participated in an act or proceeding
statements other than those in fact
made by them;
4.Making untruthful statements in a
narration of facts;
5.Altering true dates;
6.Making any alteration or
intercalation in a genuine document
which changes its meaning;
7.Issuing in an authenticated form a
document purporting to be a copy of
an original document when no such
original exists, or including in such
copy a statement contrary to, or
different from, that of the genuine
original; or
8.Intercalating any instrument or
note relative to the issuance thereof
in a protocol, registry, or official
book.
The same penalty shall be imposed
upon any ecclesiastical minister who
shall commit any of the offenses
enumerated in the preceding
paragraphs of this article, with
respect to any record or document of
such character that its falsification
may affect the civil status of persons.
26Panuncio v. People, 610 Phil. 595, 603-604
(2009).
27Jimenez v. Sorongon, G.R. No. 178607,
December 5, 2012, 687 SCRA 151, 161, citing
Alawiya, et al. v. Court of Appeals, et al., 603
Phil. 264, 276 (2009); and Miranda v. Tuliao,
520 Phil. 907, 919 (2006).
28 Id. at 919 & 921.
29 Id. at 918-922.
The Lawphil Project - Arellano Law Foundation
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
B.M. No. 2540 September 24, 2013
IN RE: PETITION TO SIGN IN THE ROLL OF
ATTORNEYS
MICHAEL A. MEDADO, Petitioner.
RESOLUTION
SERENO, CJ.:
We resolve the instant Petition to Sign in the Roll of
Attorneys filed by petitioner Michael A. Medado
(Medado).
Medado graduated from the University of the
Philippines with the degree of Bachelor of Laws in
19791 and passed the same year's bar examinations
with a general weighted average of 82.7.2
On 7 May 1980, he took the Attorney’s Oath at the
Philippine International Convention Center (PICC)
together with the successful bar examinees.3 He was
scheduled to sign in the Roll of Attorneys on 13 May
1980,4 but he failed to do so on his scheduled date,
139
allegedly because he had misplaced the Notice to Sign
the Roll of Attorneys5 given by the Bar Office when he
went home to his province for a vacation.6
Several years later, while rummaging through his old
college files, Medado found the Notice to Sign the Roll
of Attorneys. It was then that he realized that he had
not signed in the roll, and that what he had signed at
the entrance of the PICC was probably just an
attendance record.7
By the time Medado found the notice, he was already
working. He stated that he was mainly doing corporate
and taxation work, and that he was not actively
involved in litigation practice. Thus, he operated
"under the mistaken belief that since he had already
taken the oath, the signing of the Roll of Attorneys was
not as urgent, nor as crucial to his status as a
lawyer";8 and "the matter of signing in the Roll of
Attorneys lost its urgency and compulsion, and was
subsequently forgotten."9
In 2005, when Medado attended Mandatory
Continuing Legal Education (MCLE) seminars, he was
required to provide his roll number in order for his
MCLE compliances to be credited.10
Not having signed in the Roll of Attorneys, he was
unable to provide his roll number.
About seven years later, or on 6 February 2012,
Medado filed the instant Petition, praying that he be
allowed to sign in the Roll of Attorneys.11
The Office of the Bar Confidant (OBC) conducted a
clarificatory conference on the matter on 21
September 201212and submitted a Report and
Recommendation to this Court on 4 February
2013.13 The OBC recommended that the instant
petition be denied for petitioner’s gross negligence,
gross misconduct and utter lack of merit.14 It
explained that, based on his answers during the
clarificatory conference, petitioner could offer no valid
justification for his negligence in signing in the Roll of
Attorneys.15
After a judicious review of the records, we grant
Medado’s prayer in the instant petition, subject to the
payment of a fine and the imposition of a penalty
equivalent to suspension from the practice of law.
At the outset, we note that not allowing Medado to
sign in the Roll of Attorneys would be akin to imposing
upon him the ultimate penalty of disbarment, a
penalty that we have reserved for the most serious
ethical transgressions of members of the Bar.
In this case, the records do not show that this action is
warranted.
For one, petitioner demonstrated good faith and good
moral character when he finally filed the instant
Petition to Sign in the Roll of Attorneys. We note that it
was not a third party who called this Court’s attention
to petitioner’s omission; rather, it was Medado himself
who acknowledged his own lapse, albeit after the
passage of more than 30 years. When asked by the Bar
Confidant why it took him this long to file the instant
petition, Medado very candidly replied:
Mahirap hong i-explain yan pero, yun bang at the time,
what can you say? Takot ka kung anong mangyayari sa
‘yo, you don’t know what’s gonna happen. At the same
time, it’s a combination of apprehension and anxiety of
what’s gonna happen. And, finally it’s the right thing to
do. I have to come here … sign the roll and take the
oath as necessary.16
For another, petitioner has not been subject to any
action for disqualification from the practice of
law,17 which is more than what we can say of other
individuals who were successfully admitted as
members of the Philippine Bar. For this Court, this fact
demonstrates that petitioner strove to adhere to the
strict requirements of the ethics of the profession, and
that he has prima facie shown that he possesses the
character required to be a member of the Philippine
Bar.
Finally, Medado appears to have been a competent and
able legal practitioner, having held various positions at
the Laurel Law Office,18 Petron, Petrophil Corporation,
the Philippine National Oil Company, and the Energy
Development Corporation.19
All these demonstrate Medado’s worth to become a
full-fledged member of the Philippine
Bar.1âwphi1 While the practice of law is not a right but
a privilege,20 this Court will not unwarrantedly
withhold this privilege from individuals who have
shown mental fitness and moral fiber to withstand the
rigors of the profession.
That said, however, we cannot fully exculpate
petitioner Medado from all liability for his years of
inaction.
Petitioner has been engaged in the practice of law
since 1980, a period spanning more than 30 years,
without having signed in the Roll of Attorneys.21 He
justifies this behavior by characterizing his acts as
"neither willful nor intentional but based on a
mistaken belief and an honest error of judgment."22
We disagree.
While an honest mistake of fact could be used to
excuse a person from the legal consequences of his
acts23 as it negates malice or evil motive,24 a mistake of
law cannot be utilized as a lawful justification, because
everyone is presumed to know the law and its
consequences.25 Ignorantia factiexcusat; ignorantia
legis neminem excusat.
Applying these principles to the case at bar, Medado
may have at first operated under an honest mistake of
fact when he thought that what he had signed at the
PICC entrance before the oath-taking was already the
Roll of Attorneys. However, the moment he realized
that what he had signed was merely an attendance
record, he could no longer claim an honest mistake of
fact as a valid justification. At that point, Medado
should have known that he was not a full-fledged
member of the Philippine Bar because of his failure to
sign in the Roll of Attorneys, as it was the act of signing
140
therein that would have made him so.26 When, in spite Let a copy of this Resolution be furnished the Office of
of this knowledge, he chose to continue practicing law the Bar Confidant, the Integrated Bar
without taking the necessary steps to complete all the
requirements for admission to the Bar, he willfully of the Philippines, and the Office of the Court
engaged in the unauthorized practice of law. Administrator for circulation to all courts in the
country.
Under the Rules of Court, the unauthorized practice of
law by one’s assuming to be an attorney or officer of SO ORDERED.
the court, and acting as such without authority, may
constitute indirect contempt of court,27 which is MARIA LOURDES P. A. SERENO
punishable by fine or imprisonment or both.28 Such a Chief Justice
finding, however, is in the nature of criminal
contempt29 and must be reached after the filing of
charges and the conduct of hearings.30 In this case, WE CONCUR:
while it appears quite clearly that petitioner
committed indirect contempt of court by knowingly ANTONIO T. CARPIO
engaging in unauthorized practice of law, we refrain Associate Justice
from making any finding of liability for indirect
contempt, as no formal charge pertaining thereto has
been filed against him. TERESITA J.
PRESBITERO J.
LEONARDO-DE
VELASCO, JR.,
CASTRO
Knowingly engaging in unauthorized practice of law Associate Justice
Associate Justice
likewise transgresses Canon 9 of 'the Code of
Professional Responsibility, which provides:
(On official leave)
(On leave)
CANON 9 -A lawyer shall not, directly or indirectly, DIOSDADO M.
ARTURO D. BRION*
assist in the unauthorized practice of law. PERALTA**
Associate Justice
Associate Justice
While a reading of Canon 9 appears to merely prohibit
lawyers from assisting in the unauthorized practice of (On official leave)
MARIANO C. DEL
law, the unauthorized practice of law by the lawyer LUCAS P.
CASTILLO
himself is subsumed under this provision, because at BERSAMIN**
Associate Justice
the heart of Canon 9 is the lawyer's duty to prevent the Associate Justice
unauthorized practice of law. This duty likewise
applies to law students and Bar candidates. As (On leave)
aspiring members of the Bar, they are bound to ROBERTO A. ABAD MARTIN S.
comport themselves in accordance with the ethical Associate Justice VILLARAMA, JR.*
standards of the legal profession. Associate Justice

Turning now to the applicable penalty, previous

violations of Canon 9have warranted the penalty of (On official leave)
JOSE PORTUGAL
suspension from the practice of law.31 As Medado is JOSE CATRAL
PEREZ
not yet a full-fledged lawyer, we cannot suspend him MENDOZA**
Associate Justice
from the practice of law. However, we see it fit to Associate Justice
impose upon him a penalty akin to suspension by
allowing him to sign in the Roll of Attorneys one (1) BIENVENIDO L. ESTELA M. PERLAS-
year after receipt of this Resolution. For his REYES BERNABE
transgression of the prohibition against the Associate Justice Associate Justice
unauthorized practice of law, we likewise see it fit to
fine him in the amount of ₱32,000. During the one year
period, petitioner is warned that he is not allowed to MARVIC MARIO VICTOR F. LEONEN
engage in the practice of law, and is sternly warned Associate Justice
that doing any act that constitutes practice of law
before he has signed in the Roll of Attorneys will be
dealt with severely by this Court.

WHEREFORE, the instant Petition to Sign in the Roll of Footnotes

Attorneys is hereby GRANTED. Petitioner Michael A.
Medado is ALLOWED to sign in the Roll of Attorneys * On leave.
ONE (1) YEAR after receipt of this Resolution.
Petitioner is likewise ORDERED to pay a FINE of
** On official leave
₱32,000 for his unauthorized practice of law. During
the one year period, petitioner is NOT ALLOWED to
practice law, and is STERNLY WARNED that doing any
1 Rollo, p. 1; Petition dated 6 February 2012.
act that constitutes practice of law before he has
signed in the Roll of Attorneys will be dealt will be 2 Id.
severely by this Court.
3 Id. at 2.

141
 4 Id.

5 Id. at 10. G.R. No. 215723

6 Id. at 2. DOREEN GRACE PARILLA MEDINA, a.k.a. "DOREEN

GRACE MEDINA KOIKE," Petitioner
7 Id. vs.
MICHIYUKI KOIKE, THE LOCAL CIVIL REGISTRAR
8 Id. OF QUEZON CITY, METRO MANILA, and THE
ADMINISTRATOR AND CIVIL REGISTRAR GENERAL
OF THE NATIONAL STATISTICS OFFICE,
9 Id.
Respondents
10 Id. at 3.
DECISION
11 Id. at 4.
PERLAS-BERNABE, J.:
12 Id. at 20; TSN, 21 September 2012.
Assailed in this petition for review on certiorari1are
the Decision2 dated July 31, 2014 and the
13Id. at 35-43; Report and Recommendation Resolution3 dated November 28, 2014, of the Regional
of the OBC dated 24 January 2013. Trial Court of Quezon City, Branch 106 (RTC), in Sp.
Proc. No. Q-13-72692, denying petitioner's petition for
14 Id. at 42. judicial recognition of foreign divorce and declaration
of capacity to remarry pursuant to Article 26 of the
15 Id. Family Code.

16Rollo, p. 28; Report and Recommendation of The Facts

the OBC dated 24 January 2013.
Petitioner Doreen Grace Parilla (Doreen), a Filipino
17 Id. at 3; Petition dated 6 February 2012. citizen, and respondent Michiyuki Koike (Michiyuki), a
Japanese national, were married on June 14, 2005 in
18 Id. at 22; TSN, 21 September 2012, p. 3. Quezon City, Philippines.4 Their union bore two
children, Masato Koike, who was born on January 23,
19 Id. at 34; id. at 15. 2006, and Fuka Koike who was born on April 4, 2007.5

20Barcenas v. Alvero, A.C. No. 8159, 23 April On June 14, 2012, Doreen and Michiyuki, pursuant to
2010, 619 SCRA 1, 11. the laws of Japan, filed for divorce6 before the Mayor
of Ichinomiya City, Aichi Prefecture, Japan. They were
divorced on even date as appearing in the Divorce
21 Rollo, p. 35; TSN, 21 September 2012, p. 16. Certificate7and the same was duly recorded in the
Official Family Register ofMichiyuki Koike.8
22 Id. at 3; Petition dated 6 February 2012.
Seeking to have the said Divorce Certificate annotated
23Wooden v. Civil Service Commission, 508 on her Certificate of Marriage9 on file with the Local
Phil. 500, 515 (2005). Civil Registrar of Quezon City, Doreen filed on
February 7, 2013 a petition10 for judicial recognition of
24 Manuel v. People, 512 Phil. 818, 836 (2005). ioreign divorce and declaration of capacity to remarry
pursuant to the second paragraph of Article 26 of the
25 Id. Family Code11 before the RTC, docketed as Sp. Proc.
No. Q-13-72692.
26 Aguirre v. Rana, 451 Phil. 428, 435 (2003).
At the hearing, no one appeared to oppose the
27 RULES OF COURT, Rule 71, Sec. 3(e). petition.12 On the other hand, Doreen presented
several foreign documents, namely, "Certificate of
Receiving/ Certificate of Acceptance of Divorce"13 and
28 Tan v. Balajadia, 519 Phil. 632 (2006).
"Family Register of Michiyuki Koike"14 both issued by
the Mayor of Ichinomiya City and duly authenticated
29 Id. by the Consul of the Republic of the Philippines for
Osaka, Japan. She also presented a certified machine
30 RULES OF COURT, Rule 71, Sec. 3. copy of a document entitled "Divorce Certificate"
issued by the Consul for the Ambassador of Japan in
31 See Tapay v. Bancolo, A. C. No. 9604, 20 Manila that was authenticated by the Department of
March 2013; Noe-Lacsamana v. Busmente, A. the Foreign Affairs, as well as a Certification15 issued
C. No. 7269, 23. by the City Civil Registry Office in Manila that the
original of said divorce certificate was filed and
recorded in the said Office. In addition, photocopies of
the Civil Code of Japan and their corresponding
The Lawphil Project - Arellano Law Foundation
English translation, as well as two (2) books entitled

142
"The Civil Code of Japan 2000" 16 and "The Civil Code
of Japan 2009"17 were likewise submitted as proof of
the existence of Japan's law on divorce.18
The RTC Ruling
In a Decision19 dated July 31, 2014, the RTC denied
Doreen's petition, ruling that in an action for
recognition of foreign divorce decree pursuant to
Article 26 of the Family Code, the foreign divorce
decree and the national law of the alien recognizing
his or her capacity to obtain a divorce must be proven
in accordance with Sections 2420 and 2521 of Rule 132
of the Revised Rules on Evidence. The RTC ruled that
while the divorce documents presented by Doreen
were successfully proven to be public or official
records of Japan, she nonetheless fell short of proving
the national law of her husband, particularly the
existence of the law on divorce. The RTC observed that
the "The Civil Code of Japan 2000" and "The Civil Code
of Japan 2009," presented were not duly authenticated
by the Philippine Consul in Japan as required by
Sections 24 and 25 of the said Rules, adding too that
the testimony of Doreen relative to the applicable
provisions found therein and its effect on the
matrimonial relations was insufficient since she was
not presented as a qualified expert witness nor was
shown to have, at the very least, a working knowledge
of the laws of Japan, particularly those on family
relations and divorce. It likewise did not consider the
said books as learned treatises pursuant to Section
46,22 Rule 130 of the Revised Rules on Evidence, since
no expert witness on the subject matter was presented
and considering further that Philippine courts cannot
take judicial notice of foreignjudgments and law.23
Doreen's motion for reconsideration24 was denied in a
Resolution25 dated November 28, 2014; hence, this
petition.
The Issue Before the Court
The core issue for the Court's resolution is whether or
not the RTC erred in denying the petition for judicial
recognition of foreign divorce.1âwphi1
The Court's Ruling
At the outset, it bears stressing that Philippine law
does not provide for absolute divorce; hence, our
courts cannot grant it. However, Article 26 of the
Family Code - which addresses foreign marriages or
mixed marriages involving a Filipino and a foreigner -
allows a Filipino spouse to contract a subsequent
marriage in case the divorce is validly obtained abroad
by an alien spouse capacitating him or her to remarry.
The provision reads:
Art. 26. All marriages solemnized outside the
Philippines in accordance with the laws in force in the
country where they were solemnized, and valid there
as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37
and 38.
Where a marriage between a Filipino citizen and a
foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to
remarry under Philippine law. (Emphasis supplied)
Under the above-highlighted paragraph, the law
confers jurisdiction on Philippine courts to extend the
effect of a foreign divorce decree to a Filipino spouse
without undergoing trial to determine the validity of
the dissolution of the marriage.26
In Corpuz v. Sta. Tomas,27the Court had the occasion to
rule that:
The starting point in any recognition of a foreign
divorce judgment is the acknowledgment that our
courts do not take judicial notice of foreign judgments
and laws.1âwphi1 Justice Herrera explained that, as a
rule, "no sovereign is bound to give effect within its
dominion to a judgment rendered by a tribunal of
another country." This means that the foreign
judgment and its authenticity must be proven as
facts under our rules on evidence, together with
the alien's applicable national law to show the
effect of the judgment on the alien himself or
herself. The recognition may be made in an action
instituted specifically for the purpose or in another
action where a party invokes the foreign decree as an
integral aspect of his claim or defense.28 (Emphasis
and underscoring supplied; citation omitted)
Thus, in Garcia v. Recio,29 it was pointed out that in
order for a divorce obtained abroad by the alien
spouse to be recognized in our jurisdiction, it must be
shown that the divorce decree is valid according to the
national law of the foreigner. Both the divorce decree
and the governing personal law of the alien spouse
who obtained the divorce must be proven.30 Since our
courts do not take judicial notice of foreign laws and
judgment, our law on evidence requires that both the
divorce decree and the national law of the alien must
be alleged and proven like any other fact.31
Considering that the validity of the divorce decree
between Doreen and Michiyuki, as well as the
existence of pertinent laws of Japan on the matter are
essentially factual that calls for a re-evaluation of the
evidence presented before the RTC, the issue raised in
the instant appeal is obviously a question of fact that is
beyond the ambit of a Rule 45 petition for review.
Well entrenched is the rule that this Court is not a trier
of facts. The resolution of factual issues is the function
of the lower courts, whose findings on these matters
are received with respect and are in fact binding
subject to certain exceptions.32 In this regard, it is
settled that appeals taken from judgments or final
orders rendered by RTC in the exercise of its original
jurisdiction raising questions of fact or mixed
questions of fact and law should be brought to the
Court of Appeals (CA) in accordance with Rule 41 of
the Rules of Court.33
Nonetheless, despite the procedural restrictions on
Rule 45 appeals as above-adverted, the Court may
refer the case to the CA under paragraph 2, Section 6
of Rule 56 of the Rules of Court, which provides:
SEC. 6. Disposition of improper appeal. -x x x
143
An appeal by certiorari taken to the Supreme Court Footnotes
from the Regional Trial Court submitting issues of fact
may be referred to the Court of Appeals for decision or 1 Rollo, pp. 3-54.
appropriate action. The determination of the Supreme
Court on whether or not issues of fact are involved 2Id. at 58-65. Penned by Judge Angelene Mary
shall be final. W. Quimpo-Sale.

This, notwithstanding the express provision under 3 Id. at 66-70.

Section 5 (f) thereof that an appeal likewise "may" be
dismissed when there is error irr the choice or mode
of appeal.34
4 Id. at 80.

Since the said Rules denote discretion on the part of

5 Id. at 59.
the Court to either dismiss the appeal or refer the case
to the CA, the question of fact involved in the instant
6 See Certificate of Receiving; id. at 109.
appeal and substantial ends of justice warrant that the
case be referred to the CA for further appropriate 7 Id.at81.
proceedings. It bears to stress that procedural rules
were intended to ensure proper administration of law 8 See id.
and justice. The rules of procedure ought not to be
applied in a very rigid, technical sense, for they are 9 Id. at 97.
adopted to help secure, not override, substantial
justice. A deviation from its rigid enforcement may 10 Id.at71-79.
thus be allowed to attain its prime objective, for after
all, the dispensation of justice is the core reason for
the existence of the courts.35
11Executive Order No. 209, as amended,
entitled "THE FAMILY CODE OF THE
PHILIPPINES," August 4, 1988.
WHEREFORE, in the interest of orderly procedure and
substantial justice, the case is hereby REFERRED to
the Court of Appeals for appropriate action including
12 Rollo, p. 58.
the reception of evidence
to DETERMINE and RESOLVE the pertinent factual 13 Id. at 109-110.
issues in accordance with this Decision.
14 Id. at 101-107.
SO ORDERED.
15 Id. at 83.
ESTELA M. PERLAS-BERNABE
Associate Justice 16 Id. at 111-115.

WE CONCUR: 17 Id. at 116-119.

MARIA LOURDES P.A. SERENO 18 See id. at 62.

Chief Justice
Chairperson 19 Id. at 58-65.

TERESITA J. 20SECTION 24. Proof of official record. - The

LEONARDO-DE LUCAS P. BERSAMIN record of public documents referred to in
CASTRO Associate Justice paragraph (a) of section 19, when admissible
Associate Justice for any purpose, may be evidenced by an
official publication thereof or by a copy
ALFREDO BENJAMIN S. CAGUIOA attested by the officer having the legal
Associate Justice custody of the record, or by his deputy, and
accompanied, if the record is not kept in the
Philippines, with a certificate that such officer
CERTIFICATION
has the custody. If the office in which the
record is kept is in a foreign country, the
Pursuant to Section 13, Article VIII of the Constitution, certificate may be made by a secretary of the
I certify that the conclusions in the above Decision had embassy or legation, consul-general, consul,
been reached in consultation before the case was vice-consul, or consular agent or by any
assigned to the writer of the opinion of the Court's officer in the foreign service of the Philippines
Division. stationed in the foreign country in which the
record is kept, and authenticated by the seal
MARIA LOURDES P. A. SERENO of his office.
Chief Justice
21SECTION 25. What attestation of copy must
state.- Whenever a copy of a document or
record is attested for the purpose of evidence,
the attestation must state, in substance, that

144
 the copy is a correct copy of the original, or a
specific part thereof, as the case may be. The
attestation must be under the official seal of
the attesting officer, if there be any, or if he be
the clerk of a court having a seal, under the
seal of such court.
22SECTION 46. Learned treatises. -A published
treatise, periodical or pamphlet on a subject
of history, law, science, or art is admissible as
tending to prove the truth of a matter stated
therein if the court takes judicial notice, or a
witness expert in the subject testifies, that the
writer of the statement in the treatise,
periodical or pamphlet is recognized in his
profession or calling as expert in the subject.
CARPIO, J.:
The Case
This is a direct recourse to this Court from the
Regional Trial Court (RTC), Branch 107, Quezon City,
through a petition for review on certiorari under Rule
45 of the Rules of Court on a pure question of law. The
petition assails the Order1 dated 31 January 2011 of
the RTC in Civil Case No. Q-11-68582 and its
Resolution dated 2 March 2011 denying petitioner’s
Motion for Reconsideration. The RTC dismissed the
petition for "Judicial Recognition of Foreign Judgment
(or Decree of Absolute Nullity of Marriage)" based on
improper venue and the lack of personality of
petitioner, Minoru Fujiki, to file the petition.

23 Rollo, pp. 63-64. The Facts

24 Id. at 169-193. Petitioner Minoru Fujiki (Fujiki) is a Japanese national

who married respondent Maria Paz Galela Marinay
25 Id. at 66-70. (Marinay) in the Philippines2 on 23 January 2004. The
marriage did not sit well with petitioner’s parents.
26 Fujiki v. Marinay, 712 Phil. 524, 555 (2013). Thus, Fujiki could not bring his wife to Japan where he
resides. Eventually, they lost contact with each other.
27 642 Phil. 420 (2010).
In 2008, Marinay met another Japanese, Shinichi
28 Id. at 432-433. Maekara (Maekara). Without the first marriage being
dissolved, Marinay and Maekara were married on 15
May 2008 in Quezon City, Philippines. Maekara
29 418 Phil. 723 (2001). brought Marinay to Japan. However, Marinay allegedly
suffered physical abuse from Maekara. She left
30 Id. at 725. Maekara and started to contact Fujiki.3

31 Id. at 735. Fujiki and Marinay met in Japan and they were able to
reestablish their relationship. In 2010, Fujiki helped
32Bank of the Philippine Islands v. Sarabia Marinay obtain a judgment from a family court in
Manor Hotel Corporation, 715 Phil. 420, 433- Japan which declared the marriage between Marinay
435 (2013). and Maekara void on the ground of bigamy.4 On 14
January 2011, Fujiki filed a petition in the RTC
33See Far Eastern Surety and Insurance Co., entitled: "Judicial Recognition of Foreign Judgment (or
Inc. v. People, 721 Phil. 760, 766-767 (2013). Decree of Absolute Nullity of Marriage)." Fujiki prayed
that (1) the Japanese Family Court judgment be
34CGP Transportation and Services recognized; (2) that the bigamous marriage between
Corporation v. PC! Leasing and Finance, Marinay and Maekara be declared void ab initiounder
Inc., 548 Phil. 242, 253-254 (2007). Articles 35(4) and 41 of the Family Code of the
Philippines;5 and (3) for the RTC to direct the Local
Civil Registrar of Quezon City to annotate the Japanese
35Spouses Agbulos v. Gutierrez, 607 Phil. 288,
Family Court judgment on the Certificate of Marriage
295 (2009).
between Marinay and Maekara and to endorse such
annotation to the Office of the Administrator and Civil
Registrar General in the National Statistics Office
The Lawphil Project - Arellano Law Foundation (NSO).6

The Ruling of the Regional Trial Court

G.R. No. 196049 June 26, 2013 A few days after the filing of the petition, the RTC
immediately issued an Order dismissing the petition
MINORU FUJIKI, PETITIONER, and withdrawing the case from its active civil
vs. docket.7 The RTC cited the following provisions of the
MARIA PAZ GALELA MARINAY, SHINICHI Rule on Declaration of Absolute Nullity of Void
MAEKARA, LOCAL CIVIL REGISTRAR OF QUEZON Marriages and Annulment of Voidable Marriages (A.M.
CITY, AND THE ADMINISTRATOR AND CIVIL No. 02-11-10-SC):
REGISTRAR GENERAL OF THE NATIONAL
STATISTICS OFFICE,RESPONDENTS. Sec. 2. Petition for declaration of absolute nullity of
void marriages. –
DECISION

145
(a) Who may file. – A petition for declaration of
absolute nullity of void marriage may be filed solely by
the husband or the wife.
xxxx
Sec. 4. Venue. – The petition shall be filed in the Family
Court of the province or city where the petitioner or
the respondent has been residing for at least six
months prior to the date of filing, or in the case of a
non-resident respondent, where he may be found in
the Philippines, at the election of the petitioner. x x x
The RTC ruled, without further explanation, that the
petition was in "gross violation" of the above
provisions. The trial court based its dismissal on
Section 5(4) of A.M. No. 02-11-10-SC which provides
that "[f]ailure to comply with any of the preceding
requirements may be a ground for immediate
dismissal of the petition."8 Apparently, the RTC took
the view that only "the husband or the wife," in this
case either Maekara or Marinay, can file the petition to
declare their marriage void, and not Fujiki.
Fujiki moved that the Order be reconsidered. He
argued that A.M. No. 02-11-10-SC contemplated
ordinary civil actions for declaration of nullity and
annulment of marriage. Thus, A.M. No. 02-11-10-SC
does not apply. A petition for recognition of foreign
judgment is a special proceeding, which "seeks to
establish a status, a right or a particular fact," 9 and not
a civil action which is "for the enforcement or
protection of a right, or the prevention or redress of a
wrong."10 In other words, the petition in the RTC
sought to establish (1) the status and concomitant
rights of Fujiki and Marinay as husband and wife and
(2) the fact of the rendition of the Japanese Family
Court judgment declaring the marriage between
Marinay and Maekara as void on the ground of bigamy.
The petitioner contended that the Japanese judgment
was consistent with Article 35(4) of the Family Code of
the Philippines11 on bigamy and was therefore entitled
to recognition by Philippine courts.12
In any case, it was also Fujiki’s view that A.M. No. 02-
11-10-SC applied only to void marriages under Article
36 of the Family Code on the ground of psychological
incapacity.13 Thus, Section 2(a) of A.M. No. 02-11-10-
SC provides that "a petition for declaration of absolute
nullity of void marriages may be filed solely by the
husband or the wife." To apply Section 2(a) in bigamy
would be absurd because only the guilty parties would
be permitted to sue. In the words of Fujiki, "[i]t is not,
of course, difficult to realize that the party interested
in having a bigamous marriage declared a nullity
would be the husband in the prior, pre-existing
marriage."14 Fujiki had material interest and therefore
the personality to nullify a bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or
Correction of Entries in the Civil Registry) of the Rules
of Court is applicable. Rule 108 is the "procedural
implementation" of the Civil Register Law (Act No.
3753)15 in relation to Article 413 of the Civil
Code.16 The Civil Register Law imposes a duty on the
"successful petitioner for divorce or annulment of
marriage to send a copy of the final decree of the court
to the local registrar of the municipality where the
dissolved or annulled marriage was
solemnized."17 Section 2 of Rule 108 provides that
entries in the civil registry relating to "marriages,"
"judgments of annulments of marriage" and
"judgments declaring marriages void from the
beginning" are subject to cancellation or
correction.18 The petition in the RTC sought (among
others) to annotate the judgment of the Japanese
Family Court on the certificate of marriage between
Marinay and Maekara.
Fujiki’s motion for reconsideration in the RTC also
asserted that the trial court "gravely erred" when, on
its own, it dismissed the petition based on improper
venue. Fujiki stated that the RTC may be confusing the
concept of venue with the concept of jurisdiction,
because it is lack of jurisdiction which allows a court
to dismiss a case on its own. Fujiki cited Dacoycoy v.
Intermediate Appellate Court19 which held that the
"trial court cannot pre-empt the defendant’s
prerogative to object to the improper laying of the
venue by motu proprio dismissing the
case."20Moreover, petitioner alleged that the trial court
should not have "immediately dismissed" the petition
under Section 5 of A.M. No. 02-11-10-SC because he
substantially complied with the provision.
On 2 March 2011, the RTC resolved to deny
petitioner’s motion for reconsideration. In its
Resolution, the RTC stated that A.M. No. 02-11-10-SC
applies because the petitioner, in effect, prays for a
decree of absolute nullity of marriage.21 The trial court
reiterated its two grounds for dismissal, i.e. lack of
personality to sue and improper venue under Sections
2(a) and 4 of A.M. No. 02-11-10-SC. The RTC
considered Fujiki as a "third person"22 in the
proceeding because he "is not the husband in the
decree of divorce issued by the Japanese Family Court,
which he now seeks to be judicially recognized, x x
x."23 On the other hand, the RTC did not explain its
ground of impropriety of venue. It only said that
"[a]lthough the Court cited Sec. 4 (Venue) x x x as a
ground for dismissal of this case[,] it should be taken
together with the other ground cited by the Court x x x
which is Sec. 2(a) x x x."24
The RTC further justified its motu proprio dismissal of
the petition based on Braza v. The City Civil Registrar of
Himamaylan City, Negros Occidental.25 The Court in
Braza ruled that "[i]n a special proceeding for
correction of entry under Rule 108 (Cancellation or
Correction of Entries in the Original Registry), the trial
court has no jurisdiction to nullify marriages x x
x."26 Braza emphasized that the "validity of marriages
as well as legitimacy and filiation can be questioned
only in a direct action seasonably filed by the proper
party, and not through a collateral attack such as [a]
petition [for correction of entry] x x x."27
The RTC considered the petition as a collateral attack
on the validity of marriage between Marinay and
Maekara. The trial court held that this is a
"jurisdictional ground" to dismiss the
petition.28 Moreover, the verification and certification
against forum shopping of the petition was not
authenticated as required under Section 529 of A.M. No.
02-11-10-SC. Hence, this also warranted the
"immediate dismissal" of the petition under the same
provision.
146
The Manifestation and Motion of the Office of the
Solicitor General and the Letters of Marinay and
Maekara
On 30 May 2011, the Court required respondents to
file their comment on the petition for review.30 The
public respondents, the Local Civil Registrar of Quezon
City and the Administrator and Civil Registrar General
of the NSO, participated through the Office of the
Solicitor General. Instead of a comment, the Solicitor
General filed a Manifestation and Motion.31
The Solicitor General agreed with the petition. He
prayed that the RTC’s "pronouncement that the
petitioner failed to comply with x x x A.M. No. 02-11-
10-SC x x x be set aside" and that the case be
reinstated in the trial court for further
proceedings.32 The Solicitor General argued that Fujiki,
as the spouse of the first marriage, is an injured party
who can sue to declare the bigamous marriage
between Marinay and Maekara void. The Solicitor
General cited Juliano-Llave v. Republic33 which held
that Section 2(a) of A.M. No. 02-11-10-SC does not
apply in cases of bigamy. In Juliano-Llave, this Court
explained:
[t]he subsequent spouse may only be expected to take
action if he or she had only discovered during the
connubial period that the marriage was bigamous, and
especially if the conjugal bliss had already vanished.
Should parties in a subsequent marriage benefit from
the bigamous marriage, it would not be expected that
they would file an action to declare the marriage void
and thus, in such circumstance, the "injured spouse"
who should be given a legal remedy is the one in a
subsisting previous marriage. The latter is clearly the
aggrieved party as the bigamous marriage not only
threatens the financial and the property ownership
aspect of the prior marriage but most of all, it causes
an emotional burden to the prior spouse. The
subsequent marriage will always be a reminder of the
infidelity of the spouse and the disregard of the prior
marriage which sanctity is protected by the
Constitution.34
The Solicitor General contended that the petition to
recognize the Japanese Family Court judgment may be
made in a Rule 108 proceeding.35 In Corpuz v. Santo
Tomas,36 this Court held that "[t]he recognition of the
foreign divorce decree may be made in a Rule 108
proceeding itself, as the object of special proceedings
(such as that in Rule 108 of the Rules of Court) is
precisely to establish the status or right of a party or a
particular fact."37 While Corpuzconcerned a foreign
divorce decree, in the present case the Japanese
Family Court judgment also affected the civil status of
the parties, especially Marinay, who is a Filipino
citizen.
The Solicitor General asserted that Rule 108 of the
Rules of Court is the procedure to record "[a]cts,
events and judicial decrees concerning the civil status
of persons" in the civil registry as required by Article
407 of the Civil Code. In other words, "[t]he law
requires the entry in the civil registry of judicial
decrees that produce legal consequences upon a
person’s legal capacity and status x x x."38 The
Japanese Family Court judgment directly bears on the
civil status of a Filipino citizen and should therefore be
proven as a fact in a Rule 108 proceeding.
Moreover, the Solicitor General argued that there is no
jurisdictional infirmity in assailing a void marriage
under Rule 108, citing De Castro v. De
Castro39 and Niñal v. Bayadog40 which declared that
"[t]he validity of a void marriage may be collaterally
attacked."41
Marinay and Maekara individually sent letters to the
Court to comply with the directive for them to
comment on the petition.42 Maekara wrote that
Marinay concealed from him the fact that she was
previously married to Fujiki.43Maekara also denied
that he inflicted any form of violence on Marinay. 44 On
the other hand, Marinay wrote that she had no reason
to oppose the petition.45 She would like to maintain
her silence for fear that anything she say might cause
misunderstanding between her and Fujiki.46
The Issues
Petitioner raises the following legal issues:
(1) Whether the Rule on Declaration of
Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages (A.M. No.
02-11-10-SC) is applicable.
(2) Whether a husband or wife of a prior
marriage can file a petition to recognize a
foreign judgment nullifying the subsequent
marriage between his or her spouse and a
foreign citizen on the ground of bigamy.
(3) Whether the Regional Trial Court can
recognize the foreign judgment in a
proceeding for cancellation or correction of
entries in the Civil Registry under Rule 108 of
the Rules of Court.
The Ruling of the Court
We grant the petition.
The Rule on Declaration of Absolute Nullity of Void
Marriages and Annulment of Voidable Marriages (A.M.
No. 02-11-10-SC) does not apply in a petition to
recognize a foreign judgment relating to the status of a
marriage where one of the parties is a citizen of a
foreign country. Moreover, in Juliano-Llave v.
Republic,47 this Court held that the rule in A.M. No. 02-
11-10-SC that only the husband or wife can file a
declaration of nullity or annulment of marriage "does
not apply if the reason behind the petition is
bigamy."48
I.
For Philippine courts to recognize a foreign judgment
relating to the status of a marriage where one of the
parties is a citizen of a foreign country, the petitioner
only needs to prove the foreign judgment as a fact
under the Rules of Court. To be more specific, a copy of
the foreign judgment may be admitted in evidence and
proven as a fact under Rule 132, Sections 24 and 25, in
relation to Rule 39, Section 48(b) of the Rules of
147
Court.49 Petitioner may prove the Japanese Family
Court judgment through (1) an official publication or
(2) a certification or copy attested by the officer who
has custody of the judgment. If the office which has
custody is in a foreign country such as Japan, the
certification may be made by the proper diplomatic or
consular officer of the Philippine foreign service in
Japan and authenticated by the seal of office.50
To hold that A.M. No. 02-11-10-SC applies to a petition
for recognition of foreign judgment would mean that
the trial court and the parties should follow its
provisions, including the form and contents of the
petition,51 the service of summons,52 the investigation
of the public prosecutor,53 the setting of pre-trial,54 the
trial55 and the judgment of the trial court.56 This is
absurd because it will litigate the case anew. It will
defeat the purpose of recognizing foreign judgments,
which is "to limit repetitive litigation on claims and
issues."57 The interpretation of the RTC is tantamount
to relitigating the case on the merits. In Mijares v.
Rañada,58 this Court explained that "[i]f every
judgment of a foreign court were reviewable on the
merits, the plaintiff would be forced back on his/her
original cause of action, rendering immaterial the
previously concluded litigation."59
A foreign judgment relating to the status of a marriage
affects the civil status, condition and legal capacity of
its parties. However, the effect of a foreign judgment is
not automatic. To extend the effect of a foreign
judgment in the Philippines, Philippine courts must
determine if the foreign judgment is consistent with
domestic public policy and other mandatory
laws.60 Article 15 of the Civil Code provides that
"[l]aws relating to family rights and duties, or to the
status, condition and legal capacity of persons are
binding upon citizens of the Philippines, even though
living abroad." This is the rule of lex nationalii in
private international law. Thus, the Philippine State
may require, for effectivity in the Philippines,
recognition by Philippine courts of a foreign judgment
affecting its citizen, over whom it exercises personal
jurisdiction relating to the status, condition and legal
capacity of such citizen.
A petition to recognize a foreign judgment declaring a
marriage void does not require relitigation under a
Philippine court of the case as if it were a new petition
for declaration of nullity of marriage. Philippine courts
cannot presume to know the foreign laws under which
the foreign judgment was rendered. They cannot
substitute their judgment on the status, condition and
legal capacity of the foreign citizen who is under the
jurisdiction of another state. Thus, Philippine courts
can only recognize the foreign judgment as a
fact according to the rules of evidence.
Section 48(b), Rule 39 of the Rules of Court provides
that a foreign judgment or final order against a person
creates a "presumptive evidence of a right as between
the parties and their successors in interest by a
subsequent title." Moreover, Section 48 of the Rules of
Court states that "the judgment or final order may be
repelled by evidence of a want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of
law or fact." Thus, Philippine courts exercise limited
review on foreign judgments. Courts are not allowed
to delve into the merits of a foreign judgment. Once a
foreign judgment is admitted and proven in a
Philippine court, it can only be repelled on grounds
external to its merits, i.e. , "want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake
of law or fact." The rule on limited review embodies
the policy of efficiency and the protection of party
expectations,61 as well as respecting the jurisdiction of
other states.62
Since 1922 in Adong v. Cheong Seng Gee,63 Philippine
courts have recognized foreign divorce decrees
between a Filipino and a foreign citizen if they are
successfully proven under the rules of
evidence.64 Divorce involves the dissolution of a
marriage, but the recognition of a foreign divorce
decree does not involve the extended procedure under
A.M. No. 02-11-10-SC or the rules of ordinary trial.
While the Philippines does not have a divorce law,
Philippine courts may, however, recognize a foreign
divorce decree under the second paragraph of Article
26 of the Family Code, to capacitate a Filipino citizen
to remarry when his or her foreign spouse obtained a
divorce decree abroad.65
There is therefore no reason to disallow Fujiki to
simply prove as a fact the Japanese Family Court
judgment nullifying the marriage between Marinay
and Maekara on the ground of bigamy. While the
Philippines has no divorce law, the Japanese Family
Court judgment is fully consistent with Philippine
public policy, as bigamous marriages are declared void
from the beginning under Article 35(4) of the Family
Code. Bigamy is a crime under Article 349 of the
Revised Penal Code. Thus, Fujiki can prove the
existence of the Japanese Family Court judgment in
accordance with Rule 132, Sections 24 and 25, in
relation to Rule 39, Section 48(b) of the Rules of Court.
II.
Since the recognition of a foreign judgment only
requires proof of fact of the judgment, it may be made
in a special proceeding for cancellation or correction
of entries in the civil registry under Rule 108 of the
Rules of Court. Rule 1, Section 3 of the Rules of Court
provides that "[a] special proceeding is a remedy by
which a party seeks to establish a status, a right, or a
particular fact." Rule 108 creates a remedy to rectify
facts of a person’s life which are recorded by the State
pursuant to the Civil Register Law or Act No. 3753.
These are facts of public consequence such as birth,
death or marriage,66 which the State has an interest in
recording. As noted by the Solicitor General, in Corpuz
v. Sto. Tomas this Court declared that "[t]he
recognition of the foreign divorce decree may be made
in a Rule 108 proceeding itself, as the object of special
proceedings (such as that in Rule 108 of the Rules of
Court) is precisely to establish the status or right of a
party or a particular fact."67
Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. — Any
person interested in any act, event, order or
decree concerning the civil status of persons which
has been recorded in the civil register, may file a
verified petition for the cancellation or correction of
any entry relating thereto, with the Regional Trial
148
Court of the province where the corresponding civil
registry is located. (Emphasis supplied)
Fujiki has the personality to file a petition to recognize
the Japanese Family Court judgment nullifying the
marriage between Marinay and Maekara on the
ground of bigamy because the judgment concerns his
civil status as married to Marinay. For the same reason
he has the personality to file a petition under Rule 108
to cancel the entry of marriage between Marinay and
Maekara in the civil registry on the basis of the decree
of the Japanese Family Court.
There is no doubt that the prior spouse has a personal
and material interest in maintaining the integrity of
the marriage he contracted and the property relations
arising from it. There is also no doubt that he is
interested in the cancellation of an entry of a bigamous
marriage in the civil registry, which compromises the
public record of his marriage. The interest derives
from the substantive right of the spouse not only to
preserve (or dissolve, in limited instances68) his most
intimate human relation, but also to protect his
property interests that arise by operation of law the
moment he contracts marriage.69 These property
interests in marriage include the right to be supported
"in keeping with the financial capacity of the
family"70 and preserving the property regime of the
marriage.71
Property rights are already substantive rights
protected by the Constitution,72 but a spouse’s right in
a marriage extends further to relational rights
recognized under Title III ("Rights and Obligations
between Husband and Wife") of the Family
Code.73 A.M. No. 02-11-10-SC cannot "diminish,
increase, or modify" the substantive right of the
spouse to maintain the integrity of his marriage.74 In
any case, Section 2(a) of A.M. No. 02-11-10-SC
preserves this substantive right by limiting the
personality to sue to the husband or the wife of the
union recognized by law.
Section 2(a) of A.M. No. 02-11-10-SC does not preclude
a spouse of a subsisting marriage to question the
validity of a subsequent marriage on the ground of
bigamy. On the contrary, when Section 2(a) states that
"[a] petition for declaration of absolute nullity of void
marriage may be filed solely by the husband or the
wife"75—it refers to the husband or the wife of the
subsisting marriage. Under Article 35(4) of the Family
Code, bigamous marriages are void from the
beginning. Thus, the parties in a bigamous marriage
are neither the husband nor the wife under the law.
The husband or the wife of the prior subsisting
marriage is the one who has the personality to file a
petition for declaration of absolute nullity of void
marriage under Section 2(a) of A.M. No. 02-11-10-SC.
Article 35(4) of the Family Code, which declares
bigamous marriages void from the beginning, is the
civil aspect of Article 349 of the Revised Penal
Code,76 which penalizes bigamy. Bigamy is a public
crime. Thus, anyone can initiate prosecution for
bigamy because any citizen has an interest in the
prosecution and prevention of crimes.77 If anyone can
file a criminal action which leads to the declaration of
nullity of a bigamous marriage,78 there is more reason
to confer personality to sue on the husband or the wife
of a subsisting marriage. The prior spouse does not
only share in the public interest of prosecuting and
preventing crimes, he is also personally interested in
the purely civil aspect of protecting his marriage.
When the right of the spouse to protect his marriage is
violated, the spouse is clearly an injured party and is
therefore interested in the judgment of the
suit.79 Juliano-Llave ruled that the prior spouse "is
clearly the aggrieved party as the bigamous marriage
not only threatens the financial and the property
ownership aspect of the prior marriage but most of all,
it causes an emotional burden to the prior
spouse."80 Being a real party in interest, the prior
spouse is entitled to sue in order to declare a
bigamous marriage void. For this purpose, he can
petition a court to recognize a foreign judgment
nullifying the bigamous marriage and judicially
declare as a fact that such judgment is effective in the
Philippines. Once established, there should be no more
impediment to cancel the entry of the bigamous
marriage in the civil registry.
III.
In Braza v. The City Civil Registrar of Himamaylan City,
Negros Occidental, this Court held that a "trial court
has no jurisdiction to nullify marriages" in a special
proceeding for cancellation or correction of entry
under Rule 108 of the Rules of Court.81 Thus, the
"validity of marriage[] x x x can be questioned only in a
direct action" to nullify the marriage.82 The RTC relied
on Braza in dismissing the petition for recognition of
foreign judgment as a collateral attack on the marriage
between Marinay and Maekara.
Braza is not applicable because Braza does not involve
a recognition of a foreign judgment nullifying a
bigamous marriage where one of the parties is a
citizen of the foreign country.
To be sure, a petition for correction or cancellation of
an entry in the civil registry cannot substitute for an
action to invalidate a marriage. A direct action is
necessary to prevent circumvention of the substantive
and procedural safeguards of marriage under the
Family Code, A.M. No. 02-11-10-SC and other related
laws. Among these safeguards are the requirement of
proving the limited grounds for the dissolution of
marriage,83 support pendente lite of the spouses and
children,84 the liquidation, partition and distribution of
the properties of the spouses,85 and the investigation
of the public prosecutor to determine collusion.86 A
direct action for declaration of nullity or annulment of
marriage is also necessary to prevent circumvention of
the jurisdiction of the Family Courts under the Family
Courts Act of 1997 (Republic Act No. 8369), as a
petition for cancellation or correction of entries in the
civil registry may be filed in the Regional Trial Court
"where the corresponding civil registry is
located."87 In other words, a Filipino citizen cannot
dissolve his marriage by the mere expedient of
changing his entry of marriage in the civil registry.
However, this does not apply in a petition for
correction or cancellation of a civil registry entry
based on the recognition of a foreign judgment
annulling a marriage where one of the parties is a
citizen of the foreign country. There is neither
149
circumvention of the substantive and procedural
safeguards of marriage under Philippine law, nor of
the jurisdiction of Family Courts under R.A. No. 8369.
A recognition of a foreign judgment is not an action to
nullify a marriage. It is an action for Philippine courts
to recognize the effectivity of a foreign
judgment, which presupposes a case which was
already tried and decided under foreign law. The
procedure in A.M. No. 02-11-10-SC does not apply in a
petition to recognize a foreign judgment annulling a
bigamous marriage where one of the parties is a
citizen of the foreign country. Neither can R.A. No.
8369 define the jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on
Philippine courts to extend the effect of a foreign
divorce decree to a Filipino spouse without
undergoing trial to determine the validity of the
dissolution of the marriage. The second paragraph of
Article 26 of the Family Code provides that "[w]here a
marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly
obtained abroad by the alien spouse capacitating him
or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law." In Republic
v. Orbecido,88 this Court recognized the legislative
intent of the second paragraph of Article 26 which is
"to avoid the absurd situation where the Filipino
spouse remains married to the alien spouse who, after
obtaining a divorce, is no longer married to the
Filipino spouse"89 under the laws of his or her country.
The second paragraph of Article 26 of the Family Code
only authorizes Philippine courts to adopt the effects
of a foreign divorce decree precisely because the
Philippines does not allow divorce. Philippine courts
cannot try the case on the merits because it is
tantamount to trying a case for divorce.
The second paragraph of Article 26 is only a corrective
measure to address the anomaly that results from a
marriage between a Filipino, whose laws do not allow
divorce, and a foreign citizen, whose laws allow
divorce. The anomaly consists in the Filipino spouse
being tied to the marriage while the foreign spouse is
free to marry under the laws of his or her country. The
correction is made by extending in the Philippines the
effect of the foreign divorce decree, which is already
effective in the country where it was rendered. The
second paragraph of Article 26 of the Family Code is
based on this Court’s decision in Van Dorn v.
Romillo90 which declared that the Filipino spouse
"should not be discriminated against in her own
country if the ends of justice are to be served."91
The principle in Article 26 of the Family Code applies
in a marriage between a Filipino and a foreign citizen
who obtains a foreign judgment nullifying the
marriage on the ground of bigamy. The Filipino spouse
may file a petition abroad to declare the marriage void
on the ground of bigamy. The principle in the second
paragraph of Article 26 of the Family Code applies
because the foreign spouse, after the foreign judgment
nullifying the marriage, is capacitated to remarry
under the laws of his or her country. If the foreign
judgment is not recognized in the Philippines, the
Filipino spouse will be discriminated—the foreign
spouse can remarry while the Filipino spouse cannot
remarry.
Under the second paragraph of Article 26 of the Family
Code, Philippine courts are empowered to correct a
situation where the Filipino spouse is still tied to the
marriage while the foreign spouse is free to marry.
Moreover, notwithstanding Article 26 of the Family
Code, Philippine courts already have jurisdiction to
extend the effect of a foreign judgment in the
Philippines to the extent that the foreign judgment
does not contravene domestic public policy. A critical
difference between the case of a foreign divorce
decree and a foreign judgment nullifying a bigamous
marriage is that bigamy, as a ground for the nullity of
marriage, is fully consistent with Philippine public
policy as expressed in Article 35(4) of the Family Code
and Article 349 of the Revised Penal Code. The Filipino
spouse has the option to undergo full trial by filing a
petition for declaration of nullity of marriage under
A.M. No. 02-11-10-SC, but this is not the only remedy
available to him or her. Philippine courts have
jurisdiction to recognize a foreign judgment nullifying
a bigamous marriage, without prejudice to a criminal
prosecution for bigamy.
In the recognition of foreign judgments, Philippine
courts are incompetent to substitute their judgment
on how a case was decided under foreign law. They
cannot decide on the "family rights and duties, or on
the status, condition and legal capacity" of the foreign
citizen who is a party to the foreign judgment. Thus,
Philippine courts are limited to the question of
whether to extend the effect of a foreign judgment in
the Philippines. In a foreign judgment relating to the
status of a marriage involving a citizen of a foreign
country, Philippine courts only decide whether to
extend its effect to the Filipino party, under the rule
of lex nationalii expressed in Article 15 of the Civil
Code.
For this purpose, Philippine courts will only determine
(1) whether the foreign judgment is inconsistent with
an overriding public policy in the Philippines; and (2)
whether any alleging party is able to prove an extrinsic
ground to repel the foreign judgment, i.e. want of
jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact. If there is neither
inconsistency with public policy nor adequate proof to
repel the judgment, Philippine courts should, by
default, recognize the foreign judgment as part of the
comity of nations. Section 48(b), Rule 39 of the Rules
of Court states that the foreign judgment is already
"presumptive evidence of a right between the parties."
Upon recognition of the foreign judgment, this right
becomes conclusive and the judgment serves as the
basis for the correction or cancellation of entry in the
civil registry. The recognition of the foreign judgment
nullifying a bigamous marriage is a subsequent event
that establishes a new status, right and fact92 that
needs to be reflected in the civil registry. Otherwise,
there will be an inconsistency between the recognition
of the effectivity of the foreign judgment and the
public records in the Philippines.1âwphi1
However, the recognition of a foreign judgment
nullifying a bigamous marriage is without prejudice to
prosecution for bigamy under Article 349 of the
Revised Penal Code.93 The recognition of a foreign
judgment nullifying a bigamous marriage is not a
ground for extinction of criminal liability under
Articles 89 and 94 of the Revised Penal Code.
Moreover, under Article 91 of the Revised Penal Code,
150
"[t]he term of prescription [of the crime of bigamy]
shall not run when the offender is absent from the
Philippine archipelago."
Since A.M. No. 02-11-10-SC is inapplicable, the Court
no longer sees the need to address the questions on
venue and the contents and form of the petition under
Sections 4 and 5, respectively, of A.M. No. 02-11-10-SC.
WHEREFORE, we GRANT the petition. The Order
dated 31 January 2011 and the Resolution dated 2
March 2011 of the Regional Trial Court, Branch 107,
Quezon City, in Civil Case No. Q-11-68582
are REVERSED and SET ASIDE. The Regional Trial
Court is ORDERED to REINSTATE the petition for
further proceedings in accordance with this Decision.
SO ORDERED.
Brion, Del Castillo, Perez, and Perlas-Bernabe, JJ.,
concur.
Footnotes
1 Penned by Judge Jose L. Bautista Jr.
2 In Pasay City, Metro Manila.
3See rollo, p. 88; Trial Family Court Decree
No. 15 of 2009, Decree of Absolute Nullity of
Marriage between Maria Paz Galela Marinay
and Shinichi Maekara dated 18 August 2010.
Translated by Yoshiaki Kurisu, Kurisu
Gyoseishoshi Lawyer’s Office (see rollo, p. 89).
4 Id.
5FAMILY CODE OF THE PHILIPPINES (E.O.
No. 209 as amended):
Art. 35. The following marriages shall
be void from the beginning:
xxxx
(4) Those bigamous or polygamous
marriages not falling under Article
41;
xxxx
Art. 41. A marriage contracted by any
person during subsistence of a
previous marriage shall be null and
void, unless before the celebration of
the subsequent marriage, the prior
spouse had been absent for four
consecutive years and the spouse
present has a well-founded belief that
the absent spouse was already dead.
In case of disappearance where there
is danger of death under the
circumstances set forth in the
provisions of Article 391 of the Civil
Code, an absence of only two years
shall be sufficient.
6 Rollo, pp. 79-80.
7 The dispositive portion stated:
WHEREFORE, the instant case is hereby
ordered DISMISSED and WITHDRAWN from
the active civil docket of this Court. The RTC-
OCC, Quezon City is directed to refund to the
petitioner the amount of One Thousand Pesos
(₱1,000) to be taken from the Sheriff’s Trust
Fund.
8Rollo, pp. 44-45. Section 5 of the Rule on
Declaration of Absolute Nullity of Void
Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC) provides:
Sec. 5. Contents and form of petition.
– (1) The petition shall allege the
complete facts constituting the cause
of action.
(2) It shall state the names and ages
of the common children of the parties
and specify the regime governing
their property relations, as well as
the properties involved.
If there is no adequate provision in a
written agreement between the
parties, the petitioner may apply for a
provisional order for spousal
support, custody and support of
common children, visitation rights,
administration of community or
conjugal property, and other matters
similarly requiring urgent action.
(3) It must be verified and
accompanied by a certification
against forum shopping. The
verification and certification must be
signed personally by the petitioner.
No petition may be filed solely by
counsel or through an attorney-in-
fact.
If the petitioner is in a foreign
country, the verification and
certification against forum shopping
shall be authenticated by the duly
authorized officer of the Philippine
embassy or legation, consul general,
consul or vice-consul or consular
agent in said country.
(4) It shall be filed in six copies. The
petitioner shall serve a copy of the
petition on the Office of the Solicitor
General and the Office of the City or
Provincial Prosecutor, within five
days from the date of its filing and
submit to the court proof of such
service within the same period.
151
 Failure to comply with any of the
preceding requirements may be a
ground for immediate dismissal of
the petition.
9RULES OF COURT, Rule 1, Sec. 3(c). See rollo,
pp. 55-56 (Petitioner’s Motion for
Reconsideration).
10 RULES OF COURT, Rule 1, Sec. 3(a).
11FAMILY CODE (E.O. No. 209 as amended),
Art. 35. The following marriages shall be void
from the beginning:
xxxx
(4) Those bigamous or polygamous
marriages not falling under Article
41;
xxxx
12 Rollo, p. 56.
13FAMILY CODE, Art. 36. A marriage
contracted by any party who, at the time of
the celebration, was psychologically
incapacitated to comply with the essential
marital obligations of marriage, shall likewise
be void even if such incapacity becomes
manifest only after its solemnization.
14 Rollo, p. 68.
15 Enacted 26 November 1930.
16CIVIL CODE, Art. 413. All other matters
pertaining to the registration of civil status
shall be governed by special laws.
17Act No. 3753, Sec. 7. Registration of
marriage. - All civil officers and priests or
ministers authorized to solemnize marriages
shall send a copy of each marriage contract
solemnized by them to the local civil registrar
within the time limit specified in the existing
Marriage Law.
In cases of divorce and annulment of
marriage, it shall be the duty of the
successful petitioner for divorce or
annulment of marriage to send a copy
of the final decree of the court to the
local civil registrar of the
municipality where the dissolved or
annulled marriage was solemnized.
In the marriage register there shall be
entered the full name and address of
each of the contracting parties, their
ages, the place and date of the
solemnization of the marriage, the
names and addresses of the
witnesses, the full name, address, and
relationship of the minor contracting
party or parties or the person or
persons who gave their consent to
the marriage, and the full name, title,
and address of the person who
solemnized the marriage.
In cases of divorce or annulment of
marriages, there shall be recorded
the names of the parties divorced or
whose marriage was annulled, the
date of the decree of the court, and
such other details as the regulations
to be issued may require.
18 RULES OF COURT, Rule 108, Sec. 2. Entries
subject to cancellation or correction. — Upon
good and valid grounds, the following entries
in the civil register may be cancelled or
corrected: (a) births; (b) marriages; (c)
deaths; (d) legal separations; (e) judgments of
annulments of marriage; (f) judgments
declaring marriages void from the beginning;
(g) legitimations; (h) adoptions; (i)
acknowledgments of natural children; (j)
naturalization; (k) election, loss or recovery of
citizenship; (1) civil interdiction; (m) judicial
determination of filiation; (n) voluntary
emancipation of a minor; and (o) changes of
name.
19 273 Phil. 1 (1991).
20 Id. at 7. See rollo, pp. 65 and 67.
21 Rollo, p. 47.
22 Id. at 46.
23 Id. at 48.
24 Id.
25G.R. No. 181174, 4 December 2009, 607
SCRA 638.
26 Id. at 641.
27 Id. at 643.
28 See rollo, p. 49.
29Section 5 of A.M. No. 02-11-10-SC states in
part:
Contents and form of petition. – x x x
xxxx
(3) It must be verified and
accompanied by a certification
against forum shopping. The
verification and certification must be
signed personally by the petitioner.
No petition may be filed solely by
counsel or through an attorney-in-
fact.
152
 If the petitioner is in a foreign
country, the verification and
certification against forum shopping
shall be authenticated by the duly
authorized officer of the Philippine
embassy or legation, consul general,
consul or vice-consul or consular
agent in said country.
xxxx
Failure to comply with any of the
preceding requirements may be a
ground for immediate dismissal of
the petition.
30Resolution dated 30 May 2011. Rollo, p.
105.
31Under Solicitor General Jose Anselmo I.
Cadiz.
32Rollo, p. 137. The "Conclusion and Prayer"
of the "Manifestation and Motion (In Lieu of
Comment)" of the Solicitor General stated:
In fine, the court a quo’s pronouncement that
the petitioner failed to comply with the
requirements provided in A.M. No. 02-11-10-
SC should accordingly be set aside. It is, thus,
respectfully prayed that Civil Case No. Q-11-
68582 be reinstated for further proceedings.
Other reliefs, just and equitable under the
premises are likewise prayed for.
33G.R. No. 169766, 30 March 2011, 646 SCRA
637.
34Id. at 656. Quoted in the Manifestation and
Motion of the Solicitor General, pp. 8-9. See
rollo, pp. 132-133.
35 Rollo, p. 133.
36G.R. No. 186571, 11 August 2010, 628 SCRA
266.
37 Id. at 287.
38 Rollo, p. 133.
39G.R. No. 160172, 13 February 2008, 545
SCRA 162.
40 384 Phil. 661 (2000).
41 De Castro v. De Castro, supra note 39 at 169.
42 Supra note 30.
46 Id.
47 Supra note 33.
48 Supra note 33 at 655.
49RULES OF COURT, Rule 132, Sec. 24. Proof
of official record. — The record of public
documents referred to in paragraph (a) of
Section 19, when admissible for any purpose,
may be evidenced by an official publication
thereof or by a copy attested by the officer
having the legal custody of the record, or by
his deputy, and accompanied, if the record is
not kept in the Philippines, with a certificate
that such officer has the custody. If the office
in which the record is kept is in a foreign
country, the certificate may be made by a
secretary of the embassy or legation, consul
general, consul, vice consul, or consular agent
or by any officer in the foreign service of the
Philippines stationed in the foreign country in
which the record is kept, and authenticated by
the seal of his office.
Sec. 25. What attestation of copy must
state. — Whenever a copy of a
document or record is attested for the
purpose of evidence, the attestation
must state, in substance, that the
copy is a correct copy of the original,
or a specific part thereof, as the case
may be. The attestation must be
under the official seal of the attesting
officer, if there be any, or if he be the
clerk of a court having a seal, under
the seal of such court.
Rule 39, Sec. 48. Effect of foreign
judgments or final orders. — The
effect of a judgment or final order of a
tribunal of a foreign country, having
jurisdiction to render the judgment
or final order, is as follows:
(a) In case of a judgment or final
order upon a specific thing, the
judgment or final order is conclusive
upon the title of the thing; and
(b) In case of a judgment or final
order against a person, the judgment
or final order is presumptive
evidence of a right as between the
parties and their successors in
interest by a subsequent title.
In either case, the judgment or final
order may be repelled by evidence of
a want of jurisdiction, want of notice
to the party, collusion, fraud, or clear
mistake of law or fact.

43 See rollo, p. 120. 50See RULES OF COURT, Rule 132, Sec. 24-
25. See also Corpuz v. Santo Tomas, supra note
44 Id. 36 at 282.

45 See rollo, p. 146. 51 A.M. No. 02-11-10-SC, Sec. 5.

153
52 Id., Sec. 6.
53 Id., Sec. 9.
54 Id., Sec. 11-15.
55 Id., Sec. 17-18.
56 Id., Sec. 19 and 22-23.
57 Mijares v. Rañada, 495 Phil. 372, 386 (2005)
citing Eugene Scoles & Peter Hay, Conflict of
Laws 916 (2nd ed., 1982).
58 Id.
59 Id. at 386.
60 Civil Code, Art. 17. x x x
xxxx
Prohibitive laws concerning persons,
their acts or property, and those
which have for their object public
order, public policy and good customs
shall not be rendered ineffective by
laws or judgments promulgated, or
by determinations or conventions
agreed upon in a foreign country.
61Mijares v. Rañada, supra note 57 at 386.
"Otherwise known as the policy of preclusion,
it seeks to protect party expectations
resulting from previous litigation, to
safeguard against the harassment of
defendants, to insure that the task of courts
not be increased by never-ending litigation of
the same disputes, and – in a larger sense – to
promote what Lord Coke in the Ferrer’s Case
of 1599 stated to be the goal of all law: ‘rest
and quietness.’" (Citations omitted)
62 Mijares v. Rañada, supra note 57 at 382.
"The rules of comity, utility and convenience
of nations have established a usage among
civilized states by which final judgments of
foreign courts of competent jurisdiction are
reciprocally respected and rendered
efficacious under certain conditions that may
vary in different countries." (Citations
omitted)
63 43 Phil. 43 (1922).
64Corpuz v. Sto. Tomas, G.R. No. 186571, 11
August 2010, 628 SCRA 266, 280; Garcia v.
Recio, 418 Phil. 723 (2001); Adong v. Cheong
Seng Gee, supra.
65 FAMILY CODE, Art. 26. x x x
Where a marriage between a Filipino citizen
and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad
by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall have
capacity to remarry under Philippine law.
66Act No. 3753, Sec. 1. Civil Register. — A civil
register is established for recording the civil
status of persons, in which shall be entered:
(a) births; (b) deaths; (c) marriages; (d)
annulments of marriages; (e) divorces; (f)
legitimations; (g) adoptions; (h)
acknowledgment of natural children; (i)
naturalization; and (j) changes of name.
Cf. RULES OF COURT, Rule 108, Sec.
2. Entries subject to cancellation or
correction. — Upon good and valid
grounds, the following entries in the
civil register may be cancelled or
corrected: (a) births; (b) marriages;
(c) deaths; (d) legal separations; (e)
judgments of annulments of
marriage; (f) judgments declaring
marriages void from the beginning;
(g) legitimations; (h) adoptions; (i)
acknowledgments of natural children;
(j) naturalization; (k) election, loss or
recovery of citizenship; (1) civil
interdiction; (m) judicial
determination of filiation; (n)
voluntary emancipation of a minor;
and (o) changes of name.
67 Corpuz v. Sto. Tomas, supra note 36 at 287.
68 FAMILY CODE, Art. 35-67.
69 FAMILY CODE, Art. 74-148.
70FAMILY CODE, Art. 195 in relation to Art.
194.
71 See supra note 69.
72CONSTITUTION, Art. III, Sec. 1: "No person
shall be deprived of life, liberty, or property
without due process of law x x x."
73 FAMILY CODE, Art. 68-73.
74CONSTITUTION, Art. VIII, Sec. 5(5). The
Supreme Court shall have the following
powers:
xxxx
(5) Promulgate rules concerning the
protection and enforcement of
constitutional rights, pleading,
practice, and procedure in all courts,
the admission to the practice of law,
the integrated bar, and legal
assistance to the underprivileged.
Such rules shall provide a simplified
and inexpensive procedure for the
speedy disposition of cases, shall be
uniform for all courts of the same
grade, and shall not diminish,
increase, or modify substantive
rights. x x x
154
 x x x x (Emphasis supplied)
75 Emphasis supplied.
76Revised Penal Code (Act No. 3815, as
amended), Art. 349. Bigamy. - The penalty of
prisión mayor shall be imposed upon any
person who shall contract a second or
subsequent marriage before the former
marriage has been legally dissolved, or before
the absent spouse has been declared
presumptively dead by means of a judgment
rendered in the proper proceedings.
77See III RAMON AQUINO, THE REVISED
PENAL CODE (1997), 518.
78 RULES OF COURT, Rule 111, Sec.
1. Institution of criminal and civil actions. —
(a) When a criminal action is instituted, the
civil action for the recovery of civil liability
arising from the offense charged shall be
deemed instituted with the criminal action
unless the offended party waives the civil
action, reserves the right to institute it
separately or institutes the civil action prior
to the criminal action.
xxxx
79Cf. RULES OF COURT, Rule 3, Sec. 2. Parties
in interest. — A real party in interest is the
party who stands to be benefited or injured by
the judgment in the suit, or the party entitled
to the avails of the suit. Unless otherwise
authorized by law or these Rules, every action
must be prosecuted or defended in the name
of the real party in interest.
80 Juliano-Llave v. Republic, supra note 33.
81 Supra note 25.
82 Supra note 25.
83 See supra note 68.
84 FAMILY CODE, Art. 49. During the pendency
of the action and in the absence of adequate
provisions in a written agreement between
the spouses, the Court shall provide for the
support of the spouses and the custody and
support of their common children. The Court
shall give paramount consideration to the
moral and material welfare of said children
and their choice of the parent with whom they
wish to remain as provided to in Title IX. It
shall also provide for appropriate visitation
rights of the other parent.
Cf. RULES OF COURT, Rule 61.
85FAMILY CODE, Art. 50. The effects provided
for by paragraphs (2), (3), (4) and (5) of
Article 43 and by Article 44 shall also apply in
the proper cases to marriages which are
declared ab initio or annulled by final
judgment under Articles 40 and 45.
The final judgment in such cases shall
provide for the liquidation, partition
and distribution of the properties of
the spouses, the custody and support
of the common children, and the
delivery of third presumptive
legitimes, unless such matters had
been adjudicated in previous judicial
proceedings.
All creditors of the spouses as well as
of the absolute community or the
conjugal partnership shall be notified
of the proceedings for liquidation.
In the partition, the conjugal dwelling
and the lot on which it is situated,
shall be adjudicated in accordance
with the provisions of Articles 102
and 129.
A.M. No. 02-11-10-SC, Sec. 19.
Decision.— (1) If the court renders a
decision granting the petition, it shall
declare therein that the decree of
absolute nullity or decree of
annulment shall be issued by the
court only after compliance with
Articles 50 and 51 of the Family Code
as implemented under the Rule on
Liquidation, Partition and
Distribution of Properties.
xxxx
86FAMILY CODE, Art. 48. In all cases of
annulment or declaration of absolute nullity
of marriage, the Court shall order the
prosecuting attorney or fiscal assigned to it to
appear on behalf of the State to take steps to
prevent collusion between the parties and to
take care that evidence is not fabricated or
suppressed.
In the cases referred to in the
preceding paragraph, no judgment
shall be based upon a stipulation of
facts or confession of judgment.
A.M. No. 02-11-10-SC, Sec.
9. Investigation report of public
prosecutor. — (1) Within one month
after receipt of the court order
mentioned in paragraph (3) of
Section 8 above, the public
prosecutor shall submit a report to
the court stating whether the parties
are in collusion and serve copies
thereof on the parties and their
respective counsels, if any.
(2) If the public prosecutor finds that
collusion exists, he shall state the
basis thereof in his report. The
parties shall file their respective
comments on the finding of collusion
within ten days from receipt of a copy
of the report The court shall set the
report for hearing and if convinced
155
 that the parties are in collusion, it
shall dismiss the petition.
(3) If the public prosecutor reports
that no collusion exists, the court
shall set the case for pre-trial. It shall
be the duty of the public prosecutor
to appear for the State at the pre-trial.
87 RULES OF COURT, Rule 108, Sec. 1.
88 509 Phil. 108 (2005).
89 Id. at 114.
90 223 Phil. 357 (1985).
91 Id. at 363.
92 See RULES OF COURT, Rule 1, Sec. 3(c).
93 See RULES OF COURT, Rule 72, Sec.
2. Applicability of rules of civil actions. — In
the absence of special provisions, the rules
provided for in ordinary actions shall be, as
far as practicable, applicable in special
proceedings.
Rule 111, Sec. 2. When separate civil
action is suspended. — x x x
If the criminal action is filed after the
said civil action has already been
instituted, the latter shall be
suspended in whatever stage it may
be found before judgment on the
merits. The suspension shall last until
final judgment is rendered in the
criminal action. Nevertheless, before
judgment on the merits is rendered in
the civil action, the same may, upon
motion of the offended party, be
consolidated with the criminal action
in the court trying the criminal action.
In case of consolidation, the evidence
already adduced in the civil action
shall be deemed automatically
reproduced in the criminal action
without prejudice to the right of the
prosecution to cross-examine the
witnesses presented by the offended
party in the criminal case and of the
parties to present additional
evidence. The consolidated criminal
and civil actions shall be tried and
decided jointly.
During the pendency of the criminal
action, the running of the period of
prescription of the civil action which
cannot be instituted separately or
whose proceeding has been
suspended shall be tolled.
The extinction of the penal action
does not carry with it extinction of
the civil action. However, the civil
action based on delict shall be
deemed extinguished if there is a
finding in a final judgment in the
criminal action that the act or
omission from which the civil liability
may arise did not exist.
The Lawphil Project - Arellano Law Foundation
G.R. No. 212860, March 14, 2018
REPUBLIC OF THE
PHILIPPINES, Petitioner, v. FLORIE GRACE M.
COTE, Respondent.
DECISION
REYES, JR., J.:
This is a Petition for Review under Rule 45 of the
Rules of Court which seeks to reverse and set aside the
Decision1 dated January 21, 2014 and
Resolution2 dated June 11, 2014 of the Court of
Appeals (CA) in CA-G.R. SP No. 122313.
The Facts
As culled from the records, the antecedent facts are as
follows:
On July 31, 1995, Rhomel Gagarin Cote (Rhomel) and
respondent Florie Grace Manongdo-Cote (Florie) were
married in Quezon City. At the time of their marriage,
the spouses were both Filipinos and were already
blessed with a son, Christian Gabriel Manongdo who
was born in Honolulu, Hawaii, United States of
America (USA).3
On August 23, 2002, Rhomel filed a Petition for
Divorce before the Family Court of the First Circuit of
Hawaii on the ground that their marriage was
irretrievably broken. This was granted on August 23,
2002 by the issuance of a decree that states among
others:
A decree of absolute divorce is hereby granted to
[Rhomel], the bonds of matrimony between [Rhomel]
and [Florie] are hereby dissolved and the parties
hereto are restored to the status of single persons, and
either party is permitted to marry from and after the
effective date of this decree.4
Seven years later, Florie commenced a petition for
recognition of foreign judgment granting the divorce
before the Regional Trial Court (RTC). Florie also
prayed for the cancellation of her marriage contract,
hence, she also impleaded the Civil Registry of Quezon
City and the National Statistics Office (NSO). The Office
of the Solicitor General, representing Republic of the
Philippines (petitioner), deputized the Office of the
City Prosecutor to appear on behalf of the State during
the trial.5
On April 7, 2011, the RTC granted the petition and
declared Florie to be capacitated to remarry after the
RTC's decision attained finality and a decree of
absolute nullity has been issued. The RTC ruled, inter
156
alia, that Rhomel was already an American citizen The Issues
when he obtained the divorce decree,6viz.:
[Florie] has sufficiently established that she is a I. THE CA ERRED IN FINDING THAT
Filipino citizen and married to an American citizen. THE TRIAL COURT JUDGE DID NOT
Her husband obtained a Divorce Decree on 22 August COMMIT GRAVE ABUSE OF
2002 and was authenticated and registered by the DISCRETION IN APPLYING THE
Consulate General to the Philippines in Honolulu, PROCEDURAL RULES FOR NULLITY
Hawaii, U.S.A. [Florie] being a Filipino citizen and is OF MARRIAGE PROCEEDINGS UNDER
governed by Philippine laws, she is placed in an A.M. NO. 02-11-10-SC IN A
absurd, if not awkward situation where she is married PROCEEDING FOR RECOGNITION OF
to somebody who is no longer married to her. This is FOREIGN DECREE OF DIVORCE;
precisely the circumstances contemplated under
Article 26, paragraph 2 of the Family Code which II. THE CA GRAVELY ERRED IN RULING
provides a remedy for Filipino spouses like [Florie]. THAT THE STATE HAS NO
PERSONALITY TO INTERVENE IN
Under the above-cited provision, [Florie] is allowed to PROCEEDINGS FOR RECOGNITION
contract a subsequent marriage since the divorce had OF FOREIGN DECREE OF DIVORCE;
been validly obtained abroad by her American
husband, capacitating her to remarry. In this line, the III. THE CA ERRED IN FINDING THAT
court holds that this petition be, as it is, hereby THE FAILURE OF THE PETITIONER
GRANTED. TO APPEND COPIES OF THE
TRANSCRIPT OF STENOGRAPHIC
WHEREFORE, in view of the foregoing, judgment is NOTES OF FLORIE'S DIRECT
hereby rendered declaring [Florie] capacitated to EXAMINATION AND HER JUDICIAL
remarry pursuant to Article 26 paragraph 2 of the AFFIDAVIT IS FATAL,
Family Code, in view of the Divorce Decree which had NOTWITHSTANDING THAT THE
been validly obtained abroad by her American spouse, VERY SAME DOCUMENTS WERE
dissolving their marriage solemnized on 31 July 1995 INCORPORATED AND QUOTED BY
in Quezon City, Philippines.7 FLORIE IN HER COMMENT; and
Petitioner filed a Notice of Appeal on May 17, 2011.
However, the RTC, believing that the petition was
covered by A.M. No. 02-11-10-SC or the Rule on IV. THE CA ERRED IN AFFIRMING THE
Declaration of Absolute Nullity of Void Marriages and TRIAL COURT'S DECISION DATED
Annulment of Voidable Marriages, applied Section 20 APRIL 7, 2011 GRANTING FLORIE'S
of said Rule and denied the appeal because the notice PETITION FOR RECOGNITION OF
was not preceded by a motion for reconsideration.8 FOREIGN DECREE OF DIVORCE
DESPITE LACK OF SHOWING THAT
Petitioner then filed a petition for certiorari with the HER FORMER FILIPINO HUSBAND
CA claiming that the RTC committed grave abuse of WAS ALREADY AN AMERICAN
discretion. CITIZEN AT THE TIME HE
PROCURED THE DECREE OF
In a Decision9 dated January 21, 2014, the CA denied DIVORCE.11
the petition. The pertinent portions read as follows:
The fact that even the Solicitor General and private
Ruling of the Court
respondent were confused as to the true nature of the
petition and the procedure that must be followed only
The core issue for the Court's resolution is whether or
shows that We cannot attribute a whimsical and
not the provisions of A.M. No. 02-11-10-SC12applies in
capricious exercise of judgment to the RTC.
a case involving recognition of a foreign decree of
divorce.
x x x x
It bears stressing that as of present, our family laws do
Besides, petitioner's omission, by itself, is a ground for
not recognize absolute divorce between Filipino
dismissing the petition. The last paragraph of Section
husbands and wives. Such fact, however, do not
3, Rule 46 of the Rules of Court allows the dismissal of
prevent our family courts from recognizing divorce
a petition for certiorari if the material parts of the
decrees procured abroad by an alien spouse who is
records were not attached to the petition. "Certiorari,
married to a Filipino citizen.
being an extraordinary remedy, the party seeking it
must strictly observe the requirements for its
Article 26 of the Family Code states:
issuance." Although it has been ruled that the better
Art. 26. All marriages solemnized outside the
policy is for petitioner to be accorded, in the interest
Philippines, in accordance with the laws in force in the
of substantial justice, "a chance to submit the same
country where they were solemnized, and valid there
instead of dismissing the petition" We cannot allow
as such, shall also be valid in this country, except those
petitioner to benefit from this rule because the need to
prohibited under Articles 35(1), (4), (5) and (6), 36, 37
submit the transcript of stenographic notes and all
and 38.
other pieces of evidence is quite obvious for petitioner
which is questioning the sufficiency of the evidence
Where a marriage between a Filipino citizen and a
presented. Hence, it would be bending the rules too far
foreigner is validly celebrated and a divorce is
if We still allow petitioner to be excused from this
thereafter validly obtained abroad by the alien
lapse.10
spouse capacitating him or her to remarry, the
Hence, this present petition.

157
Filipino spouse shall likewise have capacity to
remarry under Philippine law.
The wordings of the second paragraph of Article 26
initially spawned confusion as to whether or not it
covers even those marriages wherein both of the
spouses were Filipinos at the time of marriage and
then one of them eventually becomes a naturalized
citizen of another country.
In the landmark case of Republic v. Orbecido III,13 the
Court ruled that the reckoning point is not the
citizenship of the parties at the time of the celebration
of the marriage, but their citizenship at the time a valid
divorce is obtained abroad by the alien spouse
capacitating the latter to remarry.14
Although the Court has already laid down the rule
regarding foreign divorce involving Filipino citizens,
the Filipino spouse who likewise benefits from the
effects of the divorce cannot automatically remarry.
Before the divorced Filipino spouse can remarry, he or
she must file a petition for judicial recognition of the
foreign divorce.
The starting point in any recognition of a foreign
divorce judgment is the acknowledgment that our
courts do not take judicial notice of foreign judgments
and laws. Justice Herrera explained that, as a rule, "no
sovereign is bound to give effect within its dominion
to a judgment rendered by a tribunal of another
country." This means that the foreign judgment and its
authenticity must be proven as facts under our rules
on evidence, together with the alien's applicable
national law to show the effect of the judgment on the
alien himself or herself. The recognition may be made
in an action instituted specifically for the purpose or in
another action where a party invokes the foreign
decree as an integral aspect of his claim or defense. 15
To clarify, respondent filed with the RTC a petition to
recognize the foreign divorce decree procured by her
naturalized (originally Filipino) husband in Hawaii,
USA. By impleading the Civil Registry of Quezon City
and the NSO, the end sought to be achieved was the
cancellation and or correction of entries involving her
marriage status.
In Corpuz v. Sto. Tomas, et al.,16 the Court briefly
explained the nature of recognition proceedings vis-a-
vis cancellation of entries under Rule 108 of the Rules
of Court, viz.:
Article 412 of the Civil Code declares that no entry in a
civil register shall be changed or corrected, without
judicial order. The Rules of Court supplements Article
412 of the Civil Code by specifically providing for a
special remedial proceeding by which entries in the
civil registry may be judicially cancelled or corrected.
Rule 108 of the Rules of Court sets in detail the
jurisdictional and procedural requirements that must
be complied with before a judgment, authorizing the
cancellation or correction, may be annotated in the
civil registry. It also requires, among others, that the
verified petition must be filed with the RTC of the
province where the corresponding civil registry is
located; that the civil registrar and all persons who
have or claim any interest must be made parties to the
proceedings; and that the time and place for hearing
must be published in a newspaper of general
circulation. x x x.
We hasten to point out, however, that this ruling
should not be construed as requiring two separate
proceedings for the registration of a foreign divorce
decree in the civil registry one for recognition of the
foreign decree and another specifically for cancellation
of the entry under Rule 108 of the Rules of Court. The
recognition of the foreign divorce decree may be made
in a Rule 108 proceeding itself, as the object of special
proceedings (such as that in Rule 108 of the Rules of
Court) is precisely to establish the status or right of a
party or a particular fact. Moreover, Rule 108 of the
Rules of Court can serve as the appropriate adversarial
proceeding by which the applicability of the foreign
judgment can be measured and tested in terms of
jurisdictional infirmities, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.17
The RTC, in its Decision18 dated January 21, 2014
ruled that Florie had sufficiently established that she is
married to an American citizen and having proven
compliance with the legal requirements, is declared
capacitated to remarry.
The confusion arose when the RTC denied petitioner's
appeal on the ground that no prior motion for
reconsideration was filed as required under Section 20
of A.M. No. 02-11-10-SC. Petitioner posits that A.M. No.
02-11-10-SC do not cover cases involving recognition
of foreign divorce because the wording of Section 1
thereof clearly states that it shall only apply to
petitions for declaration of absolute nullity of void
marriages and annulment of voidable marriages, viz.:
Section 1. Scope - This Rule shall govern petitions
for declaration of absolute nullity of void
marriages and annulment of voidable marriages under
the Family Code of the Philippines. [Underscoring
Ours]
Rule 41 of the Rules of Court applies; Motion for
Reconsideration not a condition precedent to the
filing of an appeal
The CA is correct when it ruled that the trial court
misapplied Section 20 of A.M. No. 02-11-10-SC.
A decree of absolute divorce procured abroad is
different from annulment as defined by our family
laws. A.M. No. 02-11-10-SC only covers void19and
voidable20marriages that are specifically cited and
enumerated in the Family Code of the
Philippines. Void and voidable mmTiages contemplate
a situation wherein the basis for the judicial
declaration of absolute nullity or annulment of the
marriage exists before or at the time of the marriage. It
treats the marriage as if it never existed. Divorce, on
the other hand, ends a legally valid marriage and is
usually due to circumstances arising after the
marriage.
It was error for the RTC to use as basis for denial of
petitioner's appeal Section 20 of A.M. No. 02-11-10-SC.
Since Florie followed the procedure for cancellation of
entry in the civil registry, a special proceeding
governed by Rule 108 of the Rules of Court, an appeal
from the RTC decision should be governed by Section
321 of Rule 41 of the Rules of Court and not A.M. No.
02-11-10-SC.
As culled from the records, petitioner received a copy
of the RTC Decision on May 5, 2011. It filed a Notice of
Appeal22 on May 17, 2011, thus complying with the
15-day reglementary period for filing an appeal.
158
 1Rollo, pp. 65-72.
An appeal is a statutory right that must be exercised
only in the manner and in accordance with the 2 Id. at 73.
provisions of law. Having satisfactorily shown that
they have complied with the rules on appeal, 3 Id. at 65.
petitioners are entitled to the proper and just
disposition of their cause.23 4 Id.

This now brings the Court to the issue whether or not 5 Id.
the RTC's denial of petitioner's appeal is tantamount
to grave abuse of discretion. The Court rules in the 6 Id.
negative.
7 Id. at 115.
No grave abuse of discretion
8 Id. at 65.
Although the Court agrees with petitioner that the RTC
erroneously misapplied A.M. No. 02-11-10-SC, such 9 Id. at 65-72.
error does not automatically equate to grave abuse of
discretion. The Court has ruled time and again that not 10 Id. at 13-15.
all errors attributed to a lower court or tribunal fall
under the scope of a Rule 65 petition for certiorari. 11 Id. at 36-37.

Jurisprudence has defined grave abuse of discretion Rule on Declaration of Absolute Nullity of Void
12

amounting to lack or excess of jurisdiction in this wise: Mariages and Annulment of Voidable Marriages.
Grave abuse of discretion is defined as capricious or
whimsical exercise of judgment as is equivalent to lack 13 509 Phil. 108 (2005).
of jurisdiction. The abuse of discretion must be patent
and gross as to amount to an evasion of a positive duty 14 Id. at 115.
or a virtual refusal to perform a duty enjoined by law,
or to act at all in contemplation of law, as where the 15Corpuz v. Sto. Tomas, et al., 642 Phil. 420, 432-433
power is exercised in an arbitrary and despotic (2010).
manner by reason of passion and hostility.24
After a careful consideration of the evidence presented 16 642 Phil. 420 (2010).
and Florie having sufficiently complied with the
jurisdictional requirements, judgment was rendered 17 Id. at 436-437.
by the lower court recognizing the decree of foreign
divorce. It likewise declared Florie legally capacitated 18Rollo, pp. 65-72.
to remarry citing the second paragraph of Article 26 of
the Family Code. Thus, the CA is correct in denying the 19The void marriages are those enumerated under
Rule 65 petition for certiorari, notwithstanding the Articles 35, 36, 37, 38, 40, 41, 44, and 53 in relation to
RTC's dismissal of petitioner's appeaL The dismissal, Article 52 of the Family Code.
albeit erroneous, is not tainted with grave abuse of
discretion. 20The voidable marriages are those enumerated under
Article 45 of the Family Code.
The Court finds no indication from the records that the
RTC acted arbitrarily, capriciously and whimsically in 21Section 3. Period of ordinary appeal. - The appeal
arriving at its decision. A petition for certiorari will shall be taken within fifteen (15) days from notice of
prosper only if grave abuse of discretion is alleged and the judgment or final order appealed from. Where a
proved to exist. The burden is on the part of the record on appeal is required, the appellant shall file a
petitioner to prove not merely reversible error on the notice of appeal and a record on appeal within thirty
part of private respondent, but grave abuse of (30) days from notice of the judgment or final order.
discretion amounting to lack or excess of jurisdiction.
The period of appeal shall be interrupted by a timely
WHEREFORE, premises considered, the petition is motion for new trial or reconsideration. No motion for
hereby DENIED. The Decision dated January 21, 2014 extension of time to file a motion for new trial or
and Resolution dated June 11, 2014 of the Court of reconsideration shall be allowed.
Appeals in CA-G.R. SP No. 122313 are
hereby AFFIRMED. 22Rollo, p. 116.

SO ORDERED. 23Republic of the Phils. (rep. by the Phil. Orthopedic

Center) v. Spouses Luriz, 542 Phil. 137, 137 (2007).
Carpio,*(Chairperson), Peralta, Perlas-Bernabe,
and Caguioa, JJ., concur. 24Ganaden, et al. v. The Hon. CA, et al., 665 Phil. 261,
267 (2011).
Endnotes:

*Designated as Acting Chief Justice per Special Order G.R. No. 221029, April 24, 2018
No. 2539 dated February 28, 2018.

159
REPUBLIC OF THE
PHILIPPINES, Petitioner, v. MARELYN TANEDO
MANALO, Respondent.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of
the Rules of Court (Rules) seeks to reverse and set
aside the September 18, 2014 Decision1 and October
12, 2015 Resolution2 of the Court of Appeals (CA) in
CA-G.R. CV No. 100076. The dispositive portion of the
Decision states:
WHEREFORE, the instant appeal is GRANTED.
The Decision dated 15 October 2012 of the Regional
Trial Court of Dagupan City, First Judicial Region,
Branch 43, in SPEC. PROC. NO. 2012-0005
is REVERSED and SET ASIDE.
Let a copy of this Decision be served on the Local Civil
Registrar of San Juan, Metro Manila.
SO ORDERED.3
The facts are undisputed.
On January 10, 2012, respondent Marelyn Tanedo
Manalo (Manalo) filed a petition for cancellation of
entry of marriage in the Civil Registry of San Juan,
Metro Manila, by virtue of a judgment of divorce
rendered by a Japanese court.
Finding the petition to be sufficient in form and in
substance, Branch 43 of the Regional Trial Court (RTC)
of Dagupan City set the case for initial hearing on April
25, 2012. The petition and the notice of initial hearing
were published once a week for three consecutive
weeks in a newspaper of general circulation. During
the initial hearing, counsel for Manalo marked the
documentary evidence (consisting of the trial court's
Order dated January 25, 2012, affidavit of publication,
and issues of the Northern Journal dated February 21-
27, 2012, February 28 - March 5, 2012, and March 6-
12, 2012) for purposes of compliance with the
jurisdictional requirements.
The Office of the Solicitor General (OSG) entered its
appearance for petitioner Republic of the Philippines
authorizing the Office of the City Prosecutor of
Dagupan to appear on its behalf. Likewise, a
Manifestation and Motion was filed questioning the
title and/or caption of the petition considering that,
based on the allegations therein, the proper action
should be a petition for recognition and enforcement
of a foreign judgment.
As a result, Manalo moved to admit an Amended
Petition, which the court granted. The Amended
Petition, which captioned that it is also a petition for
recognition and enforcement of foreign judgment,
alleged:
2. That petitioner is previously married in the
Philippines to a Japanese national named YOSHINO
MINORO as shown by their Marriage Contract x x x;
3. That recently, a case for divorce was filed by herein
[petitioner] in Japan and after due proceedings, a
divorce decree dated December 6, 2011 was rendered
by the Japanese Court x x x;
4. That at present, by virtue of the said divorce decree,
petitioner and her divorced Japanese husband are no
longer living together and in fact, petitioner and her
daughter are living separately from said Japanese
former husband;
5. That there is an imperative need to have the entry of
marriage in the Civil Registry of San Juan, Metro
Manila cancelled, where the petitioner and the former
Japanese husband's marriage was previously
registered, in order that it would not appear anymore
that petitioner is still married to the said Japanese
national who is no longer her husband or is no longer
married to her; furthermore, in the event that
petitioner decides to be remarried, she shall not be
bothered and disturbed by said entry of marriage;
6. That this petition is filed principally for the purpose
of causing the cancellation of entry of the marriage
between the petitioner and the said Japanese national,
pursuant to Rule 108 of the Revised Rules of Court,
which marriage was already dissolved by virtue of the
aforesaid divorce decree; [and]
7. That petitioner prays, among others, that together
with the cancellation of the said entry of her marriage,
that she be allowed to return and use. her maiden
surname, MANALO.4
Manalo was allowed to testify in advance as she was
scheduled to leave for Japan for her employment.
Among the documents that were offered and admitted
were:
1. Court Order dated January 25, 2012, finding the
petition and its attachments to be sufficient in form
and in substance;
2. Affidavit of Publication;
3. Issues of the Northern Journal dated February 21-
27, 2012, February 28 - March 5, 2012, and March 6-
12, 2012;
4. Certificate of Marriage between Manalo and her
former Japanese husband;
5. Divorce Decree of the Japanese court;
6. Authentication/Certificate issued by the Philippine
Consulate General in Osaka, Japan of the Notification
of Divorce; and
7. Acceptance of Certificate of Divorce.5
The OSG did not present any controverting evidence to
rebut the allegations of Manalo.
On October 15, 2012, the trial court denied the
petition for lack of merit. In ruling that the divorce
obtained by Manalo in Japan should not be recognized,
it opined that, based on Article 15 of the New Civil
160
Code, the Philippine law "does not afford Filipinos the
right to file for a divorce, whether they are in the
country or living abroad, if they are married to
Filipinos or to foreigners, or if they celebrated their
marriage in the Philippines or in another country" and
that unless Filipinos "are naturalized as citizens of
another country, Philippine laws shall have control
over issues related to Filipinos' family rights and
duties, together with the determination of their
condition and legal capacity to enter into contracts
and civil relations, including marriages."6
On appeal, the CA overturned the RTC decision. It held
that Article 26 of the Family Code of the Philippines
(Family Code) is applicable even if it was Manalo who
filed for divorce against her Japanese husband because
the decree they obtained makes the latter no longer
married to the former, capacitating him to remarry.
Conformably with Navarro, et al. v. Exec. Secretary
Ermita, et al.7 ruling that the meaning of the law
should be based on the intent of the lawmakers and in
view of the legislative intent behind Article 26, it
would be the height of injustice to consider Manalo as
still married to the Japanese national, who, in turn, is
no longer married to her. For the appellate court, the
fact that it was Manalo who filed the divorce case is
inconsequential. Cited as similar to this case was Van
Dorn v. Judge Romillo, Jr.8 where the marriage between
a foreigner and a Filipino was dissolved through a
divorce filed abroad by the latter.
The OSG filed a motion for reconsideration, but it was
denied; hence, this petition.
We deny the petition and partially affirm the CA
decision.
Divorce, the legal dissolution of a lawful union for a
cause arising after marriage, are of two types: (1)
absolute divorce or a vinculo matrimonii, which
terminates the marriage, and (2) limited divorce or a
mensa et thoro, which suspends it and leaves the bond
in full force.9 In this jurisdiction, the following rules
exist:
1. Philippine law does not provide for absolute
divorce; hence, our courts cannot grant it.10
2. Consistent with Articles 1511 and 1712 of the New
Civil Code, the marital bond between two Filipinos
cannot be dissolved even by an absolute divorce
obtained abroad.13
3. An absolute divorce obtained abroad by a couple,
who are both aliens, may be recognized in the
Philippines, provided it is consistent with their
respective national laws.14
4. In mixed marriages involving a Filipino and a
foreigner, the former is allowed to contract a
subsequent marriage in case the absolute divorce is
validly obtained abroad by the alien spouse
capacitating him or her to remarry.15
On July 6, 1987, then President Corazon C. Aquino
signed into law Executive Order (E.O.) No. 209,
otherwise known as The Family Code of the Philippines,
which took effect on August 3, 1988.16 Shortly
thereafter, E.O. No. 227 was issued on July 17,
1987.17 Aside from amending Articles 36 and 39 of the
Family Code, a second paragraph was added to Article
26.18 This provision was originally deleted by the Civil
Code Revision Committee (Committee), but it was
presented and approved at a Cabinet meeting after
Pres. Aquino signed E.O. No. 209.19 As modified, Article
26 now states:
Art. 26. All marriages solemnized outside the
Philippines, in accordance with the laws in force in the
country where they were solemnized, and valid there
as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37
and 38.
Where a marriage between a Filipino citizen and a
foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse
shall likewise have capacity to remarry under
Philippine law.
Paragraph 2 of Article 26 confers jurisdiction on
Philippine courts to extend the effect of a foreign
divorce decree to a Filipino spouse without
undergoing trial to determine the validity of the
dissolution of the marriage.20 It authorizes our courts
to adopt the effects of a foreign divorce decree
precisely because the Philippines does not allow
divorce.21 Philippine courts cannot try the case on the
merits because it is tantamount to trying a divorce
case.22 Under the principles of comity, our jurisdiction
recognizes a valid divorce obtained by a spouse of
foreign nationality, but the legal effects thereof, e.g., on
custody, care and support of the children or property
relations of the spouses, must still be determined by
our courts.23
According to Judge Alicia Sempio-Diy, a member of
the Committee, the idea of the amendment is to avoid
the absurd situation of a Filipino as still being married
to his or her alien spouse, although the latter is no
longer married to the former because he or she had
obtained a divorce abroad that is recognized by his or
her national law.24 The aim was that it would solve the
problem of many Filipino women who, under the New
Civil Code, are still considered married to their alien
husbands even after the latter have already validly
divorced them under their (the husbands') national
laws and perhaps have already married again.25
In 2005, this Court concluded that Paragraph 2 of
Article 26 applies to a case where, at the time of the
celebration of the marriage, the parties were Filipino
citizens, but later on, one of them acquired foreign
citizenship by naturalization, initiated a divorce
proceeding, and obtained a favorable decree. We held
in Republic of the Phils. v. Orbecido III:26
The jurisprudential answer lies latent in the 1998 case
of Quita v. Court of Appeals. In Quita, the parties were,
as in this case, Filipino citizens when they got married.
The wife became a naturalized American citizen in
1954 and obtained a divorce in the same year. The
Court therein hinted, by way of obiter dictum, that a
Filipino divorced by his naturalized foreign spouse is
no longer married under Philippine law and can thus
remarry.
161
Thus, taking into consideration the legislative intent
and applying the rule of reason, we hold that
Paragraph 2 of Article 26 should be interpreted to
include cases involving parties who, at the time of the
celebration of the marriage were Filipino citizens, but
later on, one of them becomes naturalized as a foreign
citizen and obtains a divorce decree. The Filipino
spouse should likewise be allowed to remarry as if the
other party were a foreigner at the time of the
solemnization of the marriage. To rule otherwise
would be to sanction absurdity and injustice. x x x
If we are to give meaning to the legislative intent to
avoid the absurd situation where the Filipino spouse
remains married to the alien spouse who, after
obtaining a divorce is no longer married to the Filipino
spouse, then the instant case must be deemed as
coming within the contemplation of Paragraph 2 of
Article 26.
In view of the foregoing, we state the twin elements
for the application of Paragraph 2 of Article 26 as
follows:
1. There is a valid marriage that has
been celebrated between a Filipino
citizen and a foreigner; and
2. A valid divorce is obtained abroad by
the alien spouse capacitating him or
her to remarry.
The reckoning point is not the citizenship of the
parties at the time of the celebration of the marriage,
but their citizenship at the time a valid divorce is
obtained abroad by the alien spouse capacitating the
latter to remarry.27
Now, the Court is tasked to resolve whether, under the
same provision, a Filipino citizen has the capacity to
remarry under Philippine law after initiating a divorce
proceeding abroad and obtaining a favorable
judgment against his or her alien spouse who is
capacitated to remarry. Specifically, Manalo pleads for
the recognition and enforcement of the divorce decree
rendered by the Japanese court and for the
cancellation of the entry of marriage in the local civil
registry "in order that it would not appear anymore
that [she] is still married to the said Japanese national
who is no longer her husband or is no longer married
to her; [and], in the event that [she] decides to be
remarried, she shall not be bothered and disturbed by
said entry of marriage," and to return and to use her
maiden surname.
We rule in the affirmative.
Both Dacasin v. Dacasin28 and Van Dorn29 already
recognized a foreign divorce decree that was initiated
and obtained by the Filipino spouse and extended its
legal effects on the issues of child custody and
property relation, respectively.
In Dacasin, post-divorce, the former spouses executed
an Agreement for the joint custody of their minor
daughter. Later on, the husband, who is a US citizen,
sued his Filipino wife to enforce the Agreement,
alleging that it was only, the latter who exercised sole
custody of their child. The trial court dismissed the
action for lack of jurisdiction, on the ground, among
others, that the divorce decree is binding following the
"nationality rule" prevailing in this jurisdiction. The
husband moved to reconsider, arguing that the divorce
decree obtained by his former wife is void, but it was
denied. In ruling that the trial court has jurisdiction to
entertain the suit but not to enforce the Agreement,
which is void, this Court said:
Nor can petitioner rely on the divorce decree's alleged
invalidity - not because the Illinois court lacked
jurisdiction or that the divorce decree violated Illinois
law, but because the divorce was obtained by his
Filipino spouse - to support the Agreement's
enforceability. The argument that foreigners in this
jurisdiction are not bound by foreign divorce decrees
is hardly novel. Van Dorn v. Romillo settled the matter
by holding that an alien spouse of a Filipino is bound
by a divorce decree obtained abroad. There, we
dismissed the alien divorcee's Philippine suit for
accounting of alleged post-divorce conjugal property
and rejected his submission that the foreign divorce
(obtained by the Filipino spouse) is not valid in this
jurisdiction x x x.30
Van Dorn was decided before the Family Code took
into effect. There, a complaint was filed by the ex-
husband, who is a US citizen, against his Filipino wife
to render an accounting of a business that was alleged
to be a conjugal property and to be declared with right
to manage the same. Van Dorn moved to dismiss the
case on the ground that the cause of action was barred
by previous judgment in the divorce proceedings that
she initiated, but the trial court denied the motion. On
his part, her ex-husband averred that the divorce
decree issued by the Nevada court could not prevail
over the prohibitive laws of the Philippines and its
declared national policy; that the acts and declaration
of a foreign court cannot, especially if the same is
contrary to public policy, divest Philippine courts of
jurisdiction to entertain matters within its jurisdiction.
In dismissing the case filed by the alien spouse, the
Court discussed the effect of the foreign divorce on the
parties and their conjugal property in the Philippines.
Thus:
There can be no question as to the validity of that
Nevada divorce in any of the States of the United
States. The decree is binding on private respondent as
an American citizen. For instance, private respondent
cannot sue petitioner, as her husband, in any State of
the Union. What he is contending in this case is that
the divorce is not valid and binding in this jurisdiction,
the same being contrary to local law and public policy.
It is true that owing to the nationality principle
embodied in Article 15 of the Civil Code, only
Philippine nationals are covered by the policy against
absolute divorces the same being considered contrary
to our concept of public policy and morality. However,
aliens may obtain divorces abroad, which may be
recognized in the Philippines, provided they are valid
according to their national law. In this case, the
divorce in Nevada released private respondent from
the marriage from the standards of American law,
under which divorce dissolves the marriage. As
stated by the Federal Supreme Court of the United
States in Atherton vs. Atherton, 45 L. Ed. 794, 799:
162
"The purpose and effect of a decree of divorce from
the bond of matrimony by a court of competent
jurisdiction are to change the existing status or
domestic relation of husband and wife, and to free
them both from the bond. The marriage tie, when thus
severed as to one party, ceases to bind either. A
husband without a wife, or a wife without a husband,
is unknown to the law. When the law provides, in the
nature of a penalty, that the guilty party shall not
marry again, that party, as well as the other, is still
absolutely freed from the bond of the former
marriage."
Thus, pursuant to his national law, private respondent
is no longer the husband of petitioner. He would have
no standing to sue in the case below as petitioner's
husband entitled to exercise control over conjugal
assets. As he is bound by the Decision of his own
country's Court, which validly exercised jurisdiction
over him, and whose decision he does not repudiate,
he is estopped by his own representation before said
Court from asserting his right over the alleged
conjugal property.
To maintain, as private respondent does, that, under
our laws, petitioner has to be considered still married
to private respondent and still subject to a wife's
obligations under Article 109, et. seq. of the Civil Code
cannot be just. Petitioner should not be obliged to live
together with, observe respect and fidelity, and render
support to private respondent. The latter should not
continue to be one of her heirs with possible rights to
conjugal property. She should not be discriminated
against in her own country if the ends of justice are to
be served.31
In addition, the fact that a validly obtained foreign
divorce initiated by the Filipino spouse can be
recognized and given legal effects in the Philippines is
implied from Our rulings in Fujiki v. Marinay, et
al.32 and Medina v. Koike.33
In Fujiki, the Filipino wife, with the help of her first
husband, who is a Japanese national, was able to
obtain a judgment from Japan's family court, which
declared the marriage between her and her second
husband, who is a Japanese national, void on the
ground of bigamy. In resolving the issue of whether a
husband or wife of a prior marriage can file a petition
to recognize a foreign judgment nullifying the
subsequent marriage between his or her spouse and a
foreign citizen on the ground of bigamy, We ruled:
Fujiki has the personality to file a petition to recognize
the Japanese Family Court judgment nullifying the
marriage between Marinay and Maekara on the
ground of bigamy because the judgment concerns his
civil status as married to Marinay. For the same reason
he has the personality to file a petition under Rule 108
to cancel the entry of marriage between Marinay and
Maekara in the civil registry on the basis of the decree
of the Japanese Family Court.
There is no doubt that the prior spouse has a personal
and material interest in maintaining the integrity of
the marriage he contracted and the property relations
arising from it. There is also no doubt that he is
interested in the cancellation of an entry of a bigamous
marriage in the civil registry, which compromises the
public record of his marriage. The interest derives
from the substantive right of the spouse not only to
preserve (or dissolve, in limited instances) his most
intimate human relation, but also to protect his
property interests that arise by operation of law the
moment he contracts marriage. These property
interests in marriage include the right to be supported
"in keeping with the financial capacity of the family"
and preserving the property regime of the marriage.
Property rights are already substantive rights
protected by the Constitution, but a spouse's right in a
marriage extends further to relational rights
recognized under Title III ("Rights and Obligations
between Husband and Wife") of the Family Code. x x
x34
On the other hand, in Medina, the Filipino wife and her
Japanese husband jointly filed for divorce, which was
granted. Subsequently, she filed a petition before the
RTC for judicial recognition of foreign divorce and
declaration of capacity to remarry pursuant to
Paragraph 2 of Article 26. The RTC denied the petition
on the ground that the foreign divorce decree and the
national law of the alien spouse recognizing his
capacity to obtain a divorce decree must be proven in
accordance with Sections 24 and 25 of Rule 132 of the
Revised Rules on Evidence. This Court agreed and
ruled that, consistent with Corpuz v. Sto. Tomas, et
al.35 and Garcia v. Recio,36 the divorce decree and the
national law of the alien spouse must be proven.
Instead of dismissing the case, We referred it to the CA
for appropriate action including the reception of
evidence to determine and resolve the pertinent
factual issues.
There is no compelling reason to deviate from the
above-mentioned rulings. When this Court recognized
a foreign divorce decree that was initiated and
obtained by the Filipino spouse and extended its legal
effects on the issues of child custody and property
relation, it should not stop short in likewise
acknowledging that one of the usual and necessary
consequences of absolute divorce is the right to
remarry. Indeed, there is no longer a mutual obligation
to live together and observe fidelity. When the
marriage tie is severed and ceased to exist, the civil
status and the domestic relation of the former spouses
change as both of them are freed from the marital
bond.
The dissent is of the view that, under the nationality
principle, Manalo's personal status is subject to
Philippine law, which prohibits absolute divorce.
Hence, the divorce decree which she obtained under
Japanese law cannot be given effect, as she is, without
dispute, a national not of Japan, but of the Philippines.
It is said that a contrary ruling will subvert not only
the intention of the framers of the law, but also that of
the Filipino people, as expressed in the Constitution.
The Court is, therefore, bound to respect the
prohibition until the legislature deems it fit to lift the
same.
We beg to differ.
Paragraph 2 of Article 26 speaks of "a divorce x x x
validly obtained abroad by the alien spouse
capacitating him or her to remarry. " Based on a clear
163
and plain reading of the provision, it only requires that
there be a divorce validly obtained abroad. The letter
of the law does not demand that the alien spouse
should be the one who initiated the proceeding
wherein the divorce decree was granted. It does not
distinguish whether the Filipino spouse is the
petitioner or the respondent in the foreign divorce
proceeding. The Court is bound by the words of the
statute; neither can We put words in the mouths of the
lawmakers.37 "The legislature is presumed to know the
meaning of the words, to have used words advisedly,
and to have expressed its intent by the use of such
words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there
should be no departure."38
Assuming, for the sake of argument, that the word
"obtained" should be interpreted to mean that the
divorce proceeding must be actually initiated by the
alien spouse, still, the Court will not follow the letter of
the statute when to do so would depart from the true
intent of the legislature or would otherwise yield
conclusions inconsistent with the general purpose of
the act.39 Laws have ends to achieve, and statutes
should be so construed as not to defeat but to carry
out such ends and purposes.40 As held in League of
Cities of the Phils., et al. v. COMELEC, et al.:41
The legislative intent is not at all times accurately
reflected in the manner in which the resulting law is
couched. Thus, applying a verba legis or strictly literal
interpretation of a statute may render it meaningless
and lead to inconvenience, an absurd situation or
injustice. To obviate this aberration, and bearing in
mind the principle that the intent or the spirit of the
law is the law itself, resort should be to the rule that
the spirit of the law controls its letter.
To reiterate, the purpose of Paragraph 2 of Article 26
is to avoid the absurd situation where the Filipino
spouse remains married to the alien spouse who, after
a foreign divorce decree that is effective in the country
where it was rendered, is no longer married to the
Filipino spouse. The provision is a corrective measure
to address an anomaly where the Filipino spouse is
tied to the marriage while the foreign spouse is free to
marry under the laws of his or her country.42 Whether
the Filipino spouse initiated the foreign divorce
proceeding or not, a favorable decree dissolving the
marriage bond and capacitating his or her alien spouse
to remarry will have the same result: the Filipino
spouse will effectively be without a husband or wife. A
Filipino who initiated a foreign divorce proceeding is
in the same place and in "like circumstance as a
Filipino who is at the receiving end of an alien initiated
proceeding. Therefore, the subject provision should
not make a distinction. In both instance, it is extended
as a means to recognize the residual effect of the
foreign divorce decree on Filipinos whose marital ties
to their alien spouses are severed by operation of the
latter's national law.
Conveniently invoking the nationality principle is
erroneous. Such principle, found under Article 15 of
the Civil Code, is not an absolute and unbending rule.
In fact, the mere existence of Paragraph 2 of Article 26
is a testament that the State may provide for an
exception thereto. Moreover, blind adherence to the
nationality principle must be disallowed if it would
cause unjust discrimination and oppression to certain
classes of individuals whose rights are equally
protected by law. The courts have the duty to enforce
the laws of divorce as written by the Legislature only if
they are constitutional.43
While the Congress is allowed a wide leeway in
providing for a valid classification and that its decision
is accorded recognition and respect by the courts of
justice, such classification may be subjected to judicial
review.44 The deference stops where the classification
violates a fundamental right, or prejudices persons
accorded special protection by the
Constitution.45 When these violations arise, this Court
must discharge its primary role as the vanguard of
constitutional guaranties, and require a stricter and
more exacting adherence to constitutional
limitations.46 If a legislative classification
impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar
disadvantage of a suspect class strict judicial scrutiny
is required since it is presumed unconstitutional, and
the burden is upon the government to prove that the
classification is necessary to achieve a compelling
state interest and that it is the least restrictive means
to protect such interest.47
"Fundamental rights" whose infringement leads to
strict scrutiny under the equal protection clause are
those basic liberties explicitly or implicitly guaranteed
in the Constitution.48 It includes the right of
procreation, the right to marry, the right to exercise
free speech, political expression, press, assembly, and
so forth, the right to travel, and the right to vote.49 On
the other hand, what constitutes compelling state
interest is measured by the scale of rights and powers
arrayed in the Constitution and calibrated by
history.50 It is akin to the paramount interest of the
state for which some individual liberties must give
way, such as the promotion of public interest, public
safety or the general welfare.51 It essentially involves a
public right or interest that, because of its primacy,
overrides individual rights, and allows the former to
take precedence over the latter.52
Although the Family Code was not enacted by the
Congress, the same principle applies with respect to
the acts of the President, which have the force and
effect of law unless declared otherwise by the court. In
this case, We find that Paragraph 2 of Article 26
violates one of the essential requisites53 of the equal
protection clause.54 Particularly, the limitation of the
provision only to a foreign divorce decree initiated by
the alien spouse is unreasonable as it is based on
superficial, arbitrary, and whimsical classification.
A Filipino who is married to another Filipino is not
similarly situated with a Filipino who is married to a
foreign citizen. There are real, material and substantial
differences between them. Ergo, they should not be
treated alike, both as to rights conferred and liabilities
imposed. Without a doubt, there are political,
economic, cultural, and religious dissimilarities as well
as varying legal systems and procedures, all too
unfamiliar, that a Filipino national who is married to
an alien spouse has to contend with. More importantly,
while a divorce decree obtained abroad by a Filipino
against another Filipino is null and void, a divorce
decree obtained by an alien against his or her Filipino
164
spouse is recognized if made in accordance with the
national law of the foreigner.55
On the contrary, there is no real and substantial
difference between a Filipino who initiated a foreign
divorce proceedings and a Filipino who obtained a
divorce decree upon the instance of his or her alien
spouse. In the eyes of the Philippine and foreign laws,
both are considered as Filipinos who have the same
rights and obligations in a alien land. The
circumstances surrounding them are alike. Were it not
for Paragraph 2 of Article 26, both are still married to
their foreigner spouses who are no longer their
wives/husbands. Hence, to make a distinction
between them based merely on the superficial
difference of whether they initiated the divorce
proceedings or not is utterly unfair. Indeed, the
treatment gives undue favor to one and unjustly
discriminate against the other.
Further, the differentiation in Paragraph 2 of Article
26 is arbitrary. There is inequality in treatment
because a foreign divorce decree that was initiated
and obtained by a Filipino citizen against his or her
alien spouse would not be recognized even if based on
grounds similar to Articles 35, 36, 37 and 38 of the
Family Code.56 In filing for divorce based on these
grounds, the Filipino spouse cannot be accused of
invoking foreign law at whim, tantamount to insisting
that he or she should be governed with whatever law
he or she chooses. The dissent's comment that Manalo
should be "reminded that all is not lost, for she may
still pray for the severance of her marital ties before
the RTC in accordance with the mechanisms now
existing under the Family Code" is anything but
comforting. For the guidance of the bench and the bar,
it would have been better if the dissent discussed in
detail what these "mechanisms" are and how they
specifically apply in Manalo's case as well as those
who are similarly situated. If the dissent refers to a
petition for declaration of nullity or annulment of
marriage, the reality is that there is no assurance that
our courts will automatically grant the same. Besides,
such proceeding is duplicitous, costly, and protracted.
All to the prejudice of our kababayan.
It is argued that the Court's liberal interpretation of
Paragraph 2 of Article 26 encourages Filipinos to
marry foreigners, opening the floodgate to the
indiscriminate practice of Filipinos marrying foreign
nationals or initiating divorce proceedings against
their alien spouses.
The supposition is speculative and unfounded.
First, the dissent falls into a hasty generalization as no
data whatsoever was shown to support what he
intends to prove. Second, We adhere to the
presumption of good faith in this jurisdiction. Under
the rules on evidence, it is disputably presumed (i.e.,
satisfactory if uncontradicted and overcome by other
evidence) that a person is innocent of crime or
wrong,57 that a person intends the ordinary
consequences of his voluntary acts,58 that a person
takes ordinary care of his concerns,59 that
acquiescence resulted from a belief that the thing
acquiesced in was conformable to the law and
fact,60 that a man and woman deporting themselves as
husband and wife have entered into a lawful contract
of marriage,61 and that the law has been obeyed.62 It is
whimsical to easily attribute any illegal, irregular or
immoral conduct on the part of a Filipino just because
he or she opted to marry a foreigner instead of a
fellow Filipino. It is presumed that interracial unions
are entered into out of genuine love and affection,
rather than prompted by pure lust or profit. Third, We
take judicial notice of the fact that Filipinos are
relatively more forbearing and conservative in nature
and that they are more often the victims or at the
losing end of mixed marriages. And Fourth, it is not for
Us to prejudge the motive behind a Filipino's decision
to marry an alien national. In one case, it was said:
Motives for entering into a marriage are varied and
complex. The State does not and cannot dictate on the
kind of life that a couple chooses to lead. Any attempt
to regulate their lifestyle would go into the realm of
their right to privacy and would raise serious
constitutional questions. The right to marital privacy
allows married couples to structure their marriages in
almost any way they see fit, to live together or live
apart, to have children or no children, to love one
another or not, and so on. Thus, marriages entered
into for other purposes, limited or otherwise, such as
convenience, companionship, money, status, and title,
provided that they comply with all the legal requisites,
are equally valid. Love, though the ideal consideration
in a marriage contract, is not the only valid cause for
marriage. Other considerations, not precluded by law,
may validly support a marriage.63
The 1987 Constitution expresses that marriage, as an
inviolable social institution, is the foundation of the
family and shall be protected by the
State.64 Nevertheless, it was not meant to be a general
prohibition on divorce because Commissioner Jose
Luis Martin C. Gascon, in response to a question by
Father Joaquin G. Bernas during the deliberations of
the 1986 Constitutional Commission, was categorical
about this point.65 Their exchange reveal as follows:
MR. RAMA. Mr. Presiding Officer, may I ask that
Commissioner Bernas be recognized.
THE PRESIDING OFFICER (Mr. Colayco).
Commissioner Bernas is recognized.
FR. BERNAS. Just one question, and I am not sure if it
has been categorically answered. I refer specifically to
the proposal of Commissioner Gascon. Is this to be
understood as a prohibition of a general law on
divorce? His intention is to make this a prohibition so
that the legislature cannot pass a divorce law.
MR. GASCON. Mr. Presiding Officer, that was not
primarily my intention. My intention was primarily to
encourage the social institution of marriage, but not
necessarily discourage divorce. But now that he
mentioned the issue of divorce, my personal opinion is
to discourage it, Mr. Presiding Officer.
FR. BERNAS. No. my question is more categorical. Does
this carry the meaning of prohibiting a divorce law?
MR. GASCON. No. Mr. Presiding Officer.
FR. BERNAS. Thank you.66
165
Notably, a law on absolute divorce is not new in our
country. Effective March 11, 1917, Philippine courts
could grant an absolute divorce on the grounds of
adultery on the part of the wife or concubinage on the
part of the husband by virtue of Act No. 2710 of the
Philippine Legislature.67 On March 25, 1943, pursuant
to the authority conferred upon him by the
Commander-in-Chief of the Imperial Japanese Forces
in the Philippines and with the approval of the latter,
the Chairman of the Philippine Executive Commission
promulgated an E.O. No. 141 ("New Divorce Law"),
which repealed Act No. 2710 and provided eleven
grounds for absolute divorce, such as intentional or
unjustified desertion continuously for at least one year
prior to the filing of the action, slander by deed or
gross insult by one spouse against the other to such an
extent as to make further living together
impracticable, and a spouse's incurable
insanity.68 When the Philippines was liberated and the
Commonwealth Government was restored, it ceased to
have force and effect and Act No. 2710 again
prevailed.69 From August 30, 1950, upon the effectivity
of Republic Act No. 386 or the New Civil Code, an
absolute divorce obtained by Filipino citizens, whether
here or abroad, is no longer recognized.70
Through the years, there has been constant clamor
from various sectors of the Philippine society to re-
institute absolute divorce. As a matter of fact, in the
current 17th Congress, House Bill (H.B.) Nos.
116,711062,72 238073 and 602774 were filed in the
House of Representatives. In substitution of these bills,
H.B. No. 7303 entitled "An Act Instituting Absolute
Divorce and Dissolution of Marriage in the Philippines"
or the Absolute Divorce Act of 2018 was submitted by
the House Committee on Population and Family
Relations on February 28, 2018. It was approved on
March 19, 2018 on Third Reading - with 134 in favor,
57 against, and 2 abstentions. Under the bill, the
grounds for a judicial decree of absolute divorce are as
follows:
1. The grounds for legal separation under Article
55 of the Family Code, modified or amended,
as follows:
a. Physical violence or grossly abusive conduct
directed against the petitioner, a common child, or a
child of the petitioner;
b. Physical violence or moral pressure to compel the
petitioner to change religious or political affiliation;
c. Attempt of respondent to corrupt or induce the
petitioner, a common child, or a child of the petitioner,
to engage in prostitution, or connivance in such
corruption or inducement;
d. Final judgment sentencing the respondent to
imprisonment of more than six (6) years, even if
pardoned;
e. Drug addiction or habitual alcoholism or chronic
gambling of the respondent;
f. Homosexuality of the respondent;
g. Contracting by the respondent of a subsequent
bigamous marriage, whether in the Philippines or
abroad;
h. Marital infidelity or perversion or having a child
with another person other than one's spouse during
the marriage, except when upon the mutual agreement
of the spouses, a child is born to them by in vitro or a
similar procedure or when the wife bears a child after
being a victim of rape;
i. Attempt by the respondent against the life of the
petitioner, a common child or a child of the petitioner;
and
j. Abandonment of petitioner by respondent without
justifiable cause for more than one (1) year.
When the spouses are legally separated by judicial
decree for more than two (2) years, either or both
spouses can petition the proper court for an absolute
divorce based on said judicial decree of legal
separation.
1. Grounds for annulment of marriage under Article 45
of the Family Code, restated as follows:
a. The party in whose behalf it is sought
to have the marriage annulled was
eighteen (18) years of age or over but
below twenty-one (21), and the
marriage was solemnized without the
consent of the parents, guardian or
person having substitute parental
authority over the party, in that
order, unless after attaining the age of
twenty-one (21), such party freely
cohabited with the other and both
lived together as husband or wife;
b. either party was of unsound mind,
unless such party after coming to
reason, freely cohabited with the
other as husband and wife;
c. The consent of either party was
obtained by fraud, unless such party
afterwards with full knowledge of the
facts constituting the fraud, freely
cohabited with the other as husband
and wife;
d. The consent of either party was
obtained by force, intimidation or
undue influence, unless the same
having disappeared or ceased, such
party thereafter freely cohabited with
the other as husband and wife;
e. Either party was physically incapable
of consummating the marriage with
the other and such incapacity
continues or appears to be incurable;
and
f. Either party was afflicted with a
sexually transmissible infection
found to be serious or appears to be
incurable.
Provided, That the grounds mentioned in b, e and f
existed either at the time of the marriage or
supervening after the marriage.
1. When the spouses have been
separated in fact for at least five (5)
years at the time the petition for
absolute divorce is filed, and
reconciliation is highly improbable;
2. Psychological incapacity of either
spouse as provided for in Article 36
of the Family Code, whether or not
the incapacity was present at the time
of the celebration of the marriage or
later;
166
 3. When one of the spouses undergoes a
gender reassignment surgery or
transitions from one sex to another,
the other spouse is entitled to
petition for absolute divorce with the
transgender or transsexual as
respondent, or vice-versa;
4. Irreconcilable marital differences and
conflicts which have resulted in the
total breakdown of the marriage
beyond repair, despite earnest and
repeated efforts at reconciliation.
To be sure, a good number of the Filipinos led by the
Roman Catholic Church react adversely to any attempt
to enact a law on absolute divorce, viewing it as
contrary to our customs, morals, and traditions that
has looked upon marriage and family as an institution
and their nature of permanence, inviolability, and
solidarity. However, none of our laws should be based
on any religious law, doctrine, or teaching; otherwise,
the separation of Church and State will be violated.75
In the same breath that the establishment clause
restricts what the government can do with religion, it
also limits what religious sects can or cannot do. They
can neither cause the government to adopt their
particular doctrines as policy for everyone, nor can
they cause the government to restrict other groups. To
do so, in simple terms, would cause the State to adhere
to a particular religion and, thus, establish a state
religion.76
The Roman Catholic Church can neither impose its
beliefs and convictions on the State and the rest of the
citizenry nor can it demand that the nation follow its
beliefs, even if it sincerely believes that they are good
for the country.77 While marriage is considered a
sacrament, it has civil and legal consequences which
are governed by the Family Code.78 It is in this aspect,
bereft of any ecclesiastical overtone, that the State has
a legitimate right and interest to regulate.
The declared State policy that marriage, as an
inviolable social institution, is the foundation of the
family and shall be protected by the State, should not
be read in total isolation but must be harmonized with
other constitutional provisions. Aside from
strengthening the solidarity of the Filipino family, the
State is equally mandated to actively promote its total
development.79 It is also obligated to defend, among
others, the right of children to special protection from
all forms of neglect, abuse, cruelty, exploitation, and
other conditions prejudicial to their development.80 To
Our mind, the State cannot effectively enforce these
obligations if We limit the application of Paragraph 2
of Article 26 only to those foreign divorce initiated by
the alien spouse. It is not amiss to point that the
women and children are almost always the helpless
victims of all forms of domestic abuse and violence. In
fact, among the notable legislation passed in order to
minimize, if not eradicate, the menace are R.A. No.
6955 (prohibiting mail order bride and similar
practices), R.A. No. 9262 ("Anti-Violence Against
Women and Their Children Act of 2004"), R.A. No. 9710
("The Magna Carta of Women"), R.A. No. 10354 ("The
Responsible Parenthood and Reproductive Health Act of
2012"), and R.A. No. 9208 ("Anti-Trafficking in Persons
Act of 2003"), as amended by R.A. No. 10364
("Expanded Anti-Trafficking in Persons Act of 2012").
Moreover, in protecting and strengthening the Filipino
family as a basic autonomous social institution, the
Court must not lose sight of the constitutional
mandate to value the dignity of every human person,
guarantee full respect for human rights, and ensure
the fundamental equality before the law of women and
men.81
A prohibitive view of Paragraph 2 of Article 26 would
do more harm than good. If We disallow a Filipino
citizen who initiated and obtained a foreign divorce
from the coverage of Paragraph 2 of Article 26 and still
require him or her to first avail of the existing
"mechanisms" under the Family Code, any subsequent
relationship that he or she would enter in the
meantime shall be considered as illicit in the eyes of
the Philippine law. Worse, any child born out of such
"extra-marital" affair has to suffer the stigma of being
branded as illegitimate. Surely, these are just but a few
of the adverse consequences, not only to the parent
but also to the child, if We are to hold a restrictive
interpretation of the subject provision. The irony is
that the principle of inviolability of marriage under
Section 2, Article XV of the Constitution is meant to be
tilted in favor of marriage and against unions not
formalized by marriage, but without denying State
protection and assistance to live-in arrangements or to
families formed according to indigenous customs.82
This Court should not turn a blind eye to the realities
of the present time. With the advancement of
communication and information technology, as well as
the improvement of the transportation system that
almost instantly connect people from all over the
world, mixed marriages have become not too
uncommon. Likewise, it is recognized that not all
marriages are made in heaven and that imperfect
humans more often than not create imperfect
unions.83 Living in a flawed world, the unfortunate
reality for some is that the attainment of the
individual's full human potential and self-fulfillment is
not found and achieved in the context of a marriage.
Thus, it is hypocritical to safeguard the quantity of
existing marriages and, at the same time, brush aside
the truth that some of them are of rotten quality.
Going back, We hold that marriage, being a mutual and
shared commitment between two parties, cannot
possibly be productive of any good to the society
where one is considered released from the marital
bond while the other remains bound to it.84 In
reiterating that the Filipino spouse should not be
discriminated against in his or her own country if the
ends of justice are to be served, San Luis v. San
Luis85 quoted:
x x x In Alonzo v. Intermediate Appellate Court, the
Court stated:
But as has also been aptly observed, we test a law by
its results; and likewise, we may add, by its purposes.
It is a cardinal rule that, in seeking the meaning of the
law, the first concern of the judge should be to
discover in its provisions the intent of the lawmaker.
Unquestionably, the law should never be interpreted
in such a way as to cause injustice as this is never
within the legislative intent. An indispensable part of
167
that intent, in fact, for we presume the good motives of
the legislature, is to render justice.
Thus, we interpret and apply the law not
independently of but in consonance with justice. Law
and justice are inseparable, and we must keep them
so. To be sure, there are some laws that, while
generally valid, may seem arbitrary when applied in a
particular case because of its peculiar circumstances.
In such a situation, we are not bound, because only of
our nature and functions, to apply them just the same,
in slavish obedience to their language. What we do
instead is find a balance between the word and the
will, that justice may be done even as the law is
obeyed.
As judges, we are not automatons. We do not and must
not unfeelingly apply the law as it is worded, yielding
like robots to the literal command without regard to
its cause and consequence. "Courts are apt to err by
sticking too closely to the words of a law," so we are
warned, by Justice Holmes again, "where these words
import a policy that goes beyond them."
xxxx
More than twenty centuries ago, Justinian defined
justice "as the constant and perpetual wish to render
every one his due." That wish continues to motivate
this Court when it assesses the facts and the law in
every case brought to it for decision. Justice is always
an essential ingredient of its decisions. Thus when the
facts warrant, we interpret the law in a way that will
render justice, presuming that it was the intention of
the lawmaker, to begin with, that the law be dispensed
with justice.86
Indeed, where the interpretation of a statute according
to its exact and literal import would lead to
mischievous results or contravene the clear purpose of
the legislature, it should be construed according to its
spirit and reason, disregarding as far as necessary the
letter of the law.87 A statute may, therefore, be
extended to cases not within the literal meaning of its
terms, so long as they come within its spirit or intent.88
The foregoing notwithstanding, We cannot yet
write finis to this controversy by granting Manalo's
petition to recognize and enforce the divorce decree
rendered by the Japanese court and to cancel the entry
of marriage in the Civil Registry of San Juan, Metro
Manila.
Jurisprudence has set guidelines before Philippine
courts recognize a foreign judgment relating to the
status of a marriage where one of the parties is a
citizen of a foreign country. Presentation solely of the
divorce decree will not suffice.89 The fact of divorce
must still first be proven.90 Before a foreign divorce
decree can be recognized by our courts, the party
pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing
it.91
x x x Before a foreign judgment is given presumptive
evidentiary value, the document must first be
presented and admitted in evidence. A divorce
obtained abroad is proven by the divorce decree itself.
Indeed the best evidence of a judgment is the
judgment itself. The decree purports to be a written
act or record of an act of an official body or tribunal of
a foreign country.
Under Sections 24 and 25 of Rule 132, on the other
hand, a writing or document may be proven as a public
or official record of a foreign country by either (1) an
official publication or (2) a copy thereof attested by
the officer having legal custody of the document. If the
record is not kept in the Philippines, such copy must
be (a) accompanied by a certificate issued by the
proper diplomatic or consular officer in the Philippine
foreign service stationed in the foreign country in
which the record is kept and (b) authenticated by the
seal of his office.92
In granting Manalo's petition, the CA noted:
In this case, Petitioner was able to submit before the
court a quo the 1) Decision of the Japanese Court
allowing the divorce; 2)
the Authentication/Certificate issued by the Philippine
Consulate General in Osaka, Japan of the Decree of
Divorce; and 3) Acceptance of Certificate of Divorce by
Petitioner and the Japanese national. Under Rule 132,
Sections 24 and 25, in relation to Rule 39, Section 48
(b) of the Rules of Court, these documents sufficiently
prove the subject Divorce Decree as a fact. Thus, We
are constrained to recognize the Japanese Court's
judgment decreeing the divorce.93
If the opposing party fails to properly object, as in this
case, the divorce decree is rendered admissible as a
written act of the foreign court.94 As it appears, the
existence of the divorce decree was not denied by the
OSG; neither was the jurisdiction of the divorce court
impeached nor the validity of its proceedings
challenged on the ground of collusion, fraud, or clear
mistake of fact or law, albeit an opportunity to do so.95
Nonetheless, the Japanese law on divorce must still be
proved.
x x x The burden of proof lies with the "party who
alleges the existence of a fact or thing necessary in the
prosecution or defense of an action." In civil cases,
plaintiffs have the burden of proving the material
allegations of the complaint when those are denied by
the answer; and defendants have the burden of
proving the material allegations in their answer when
they introduce new matters. x x x
It is well-settled in our jurisdiction that our courts
cannot take judicial notice of foreign laws. Like any
other facts, they must be alleged and proved. x x x The
power of judicial notice must be exercised with
caution, and every reasonable doubt upon the subject
should be resolved in the negative.96
Since the divorce was raised by Manalo, the burden of
proving the pertinent Japanese law validating it, as
well as her former husband's capacity to remarry, fall
squarely upon her. Japanese laws on persons and
family relations are not among those matters that
Filipino judges are supposed to know by reason of
their judicial function.
168
WHEREFORE, the petition for review Prohibitive laws concerning persons, their acts or
on certiorari is DENIED. The September 18, 2014 property, and those which have for their object public
Decision and October 12, 2015 Resolution of the Court order, public policy and good customs shall not be
of Appeals in CA-G.R. CV No. 100076, are AFFIRMED rendered ineffective by laws or judgments
IN PART. The case is REMANDED to the court of promulgated, or by determinations or conventions
origin for further proceedings and reception of agreed upon in a foreign country.(11a)
evidence as to the relevant Japanese law on divorce.
13Tenchavez v. Escano, et al., 22 Phil. 752, 759-760
SO ORDERED. (1965), as cited in Cang v. Court of Appeals, 357 Phil.
129, 162 (1998); Llorente v. Court of Appeals, 399 Phil.
Carpio,* Velasco, Jr., Leonardo-De Castro, Bersamin, 342, 356 (2000); and Perez v. Court of Appeals, 516
Martires, Tijam, Reyes, Jr., and Gesmundo, JJ., concur. Phil. 204, 211 (2006). See also Garcia v. Recio, supra
Leonen, J., concur. See separate opinion. note 9, at 730; Republic v. Iyoy, 507 Phil. 485, 504
Del Castillo and Perlas-Bernabe, JJ., join the dissent (2005); and Lavadia v. Heirs of Juan Luces Luna, 739
of J. Caguioa. Phil. 331, 341-342 (2014).
Caguioa, J., see dissenting opinion.
Sereno, C.J., on leave. 14Garcia v. Recio, supra note 9, at 730-731.
Jardeleza, J., no part.
15FAMILY CODE, Article 26 Paragraph 2. See
also Garcia v. Recio, supra note 9, at 730 and Medina v.
Koike, supra note 10.
Endnotes:
16Republic of the Phils. v. Orbecido III, 509 Phil. 108,
112 (2005), as cited in San Luis v. San Luis, 543 Phil.
*Acting Chief Justice per Special Order No. 2539 dated 275, 291 (2007).
February 28, 2018.
17Id. at 112-113, as cited in San Luis v. San Luis, supra.
1Penned by Associate Justice Jane Aurora C. Lantion,
with Associate Justices Vicente S.E. Veloso and Nina G. 18Id. at 113, as cited in San Luis v. San Luis, supra.
Antonio-Valenzuela concurring; rollo, pp. 23-31.
19Sempio-Diy, Alicia V., HANDBOOK ON THE FAMILY
2Rollo, pp. 32-33. CODE OF THE PHILIPPINES, 1988, pp. 26-27.

3Id. at 30. (Emphasis in the original) 20Medina v. Koike, supra note 10 and Fujiki v. Marinay,
712 Phil. 524, 555 (2013).
4Id. at 42-43.
21Fujiki v. Marinay, supra.
5Id. at 25, 37-38.
22Id.
6Id. at 40-41.
23See Vda. de Catalan v. Catalan-Lee, 681 Phil. 493,
7 663 Phil. 546 (2011). 498 (2012); Roehr v. Rodriguez, 452 Phil. 608, 617-618
(2003); and Llorente v. Court of Appeals, supra note 13.
8 223 Phil. 357 (1985).
24Supra note 19, at 27. See also Republic of the Phils. v.
9Amor-Catalan v. Court of Appeals, 543 Phil. 568, 575 Orbecido III, supra note 16, at 114, as cited in Fujiki v.
(2007), citing Garcia v. Recio, 418 Phil. 723, 735-736 Marinay, supra note 20, at 555 and San Luis v. San
(2001). Luis, supranote 16, at 292.

10Garcia 25Supra note 19, at 27.

v. Redo, supra, at 730 and Medina v. Koike, G.R.
No. 215723, July 27, 2016, 798 SCRA 733, 739.
26Supra note 16.
11Art. 15. Laws relating to family rights and duties, or
to the status, condition and legal capacity of persons 27Id. at 114-115. (Citations omitted).
are binding upon citizens of the Philippines, even
though living abroad. (9a) 28 625 Phil. 494 (2010).

12Art. 17. The forms and solemnities of contracts, 29Supra note 8.

wills, and other public instruments shall be governed
by the laws of the country in which they are executed. 30Dacasinv. Dacasin, supra, at 507. (Citations omitted;
underscoring ours)
When the acts referred to are executed before the
diplomatic or consular officials of the Republic of the 31Van Dorn v. Judge Romillo, Jr., supra note 8, at 361-
Philippines in a foreign country, the solemnities 363. (Citations omitted).
established by Philippine laws shall be observed in
their execution. 32Supra note 20.

169
33Supra note 10.
34Fujiki v. Marinay, et al., supra note 20, at 549-550.
(Citations omitted).
35 642 Phil. 420 (2010).
36Supra note 9.
37Commissioner of Customs v. Manila Star Ferry, Inc.,
298 Phil. 79, 86 (1993).
38Globe-Mackay
Cable and Radio Corp. v. NLRC, 283
Phil. 649, 660 (1992), as cited in Victoria v.
Commission on Elections, 299 Phil. 263, 268
(1994); Enjay Inc. v. NLRC, 315 Phil. 648, 656 (1995);
and Pioneer Texturizing Corp. v. NLRC, 345 Phil. 1057,
1073 (1997). See also National Food Authority v.
Masada Security Agency, Inc., 493 Phil. 241, 251
(2005); Rural Bank of San Miguel, Inc. v. Monetary
Board, 545 Phil. 62, 72 (2007); Rep. of the Phils. v.
Lacap, 546 Phil. 87, 100 (2007); and Phil. Amusement
and Gaming Corp. (PAGCOR) v. Phil. Gaming Jurisdiction
Inc. (PEJI), et al., 604 Phil. 547, 553 (2009).
39Mariano, Jr. v. COMELEC, 312 Phil. 259, 268 (1995).
40Id.
41 623 Phil. 531, 564-565 (2009).
42Fujiki v. Marinay, supra note 20, at 555.
43 See Barretto Gonzalez v. Gonzalez, 58 Phil. 67, 72
(1933), as cited in Tenchavez v. Escaño, et
al., supra note 13, at 762.
44See Assn. of Small Landowners in the Phils., Inc. v.
Hon. Secretary of Agrarian Reform, 256 Phil. 777, 808
(1989) and Sameer Overseas Placement Agency, Inc. v.
Cabiles, 740 Phil. 403, 436 (2014).
45Central Bank Employees Assn., Inc. v. Bangko Sentral
ng Pilipinas, 487 Phil. 531, 597 (2004) as cited
in Serrano v. Gallant Maritime Services, Inc., 601 Phil.
245, 436 (2009). See also Puno, C.J., Separate
Concurring Opinion, Ang Ladlad LGBT Party v.
COMELEC, 632 Phil. 32, 100 (2010); Brion, J., Separate
Opinion, Biraogo v. Phil. Truth Commission of 2010, 651
Phil. 374, 550 (2010); and Leonardo-De Castro, J.,
Concurring Opinion, Garcia v. Judge Drilon, et al., 712
Phil. 44, 125 (2013).
46Central
Bank Employees Association, Inc. v. Bangko
Sentral ng Pilipinas, supra.
47Serrano v. Gallant Maritime Services, Inc., et al., 601
Phil. 245, 282 (2009) and Mosqueda v. Pilipino Banana
Growers & Exporters Association, Inc., G.R. Nos. 189185
& 189305, August 16, 2016, 800 SCRA 313, 360. See
also Brion, J., Separate Opinion, Biraogo v. Philippine
Truth Commission of 2010, supra; Velasco, Jr., J.,
Concurring Opinion, International Service for the
Acquisition of Agri-Biotech Applications, Inc. v.
Greenpeace Southeast Asia (Phils.), et al., 774 Phil. 508,
706 (2015); and Jardeleza, J., Concurring Opinion, Poe-
Llamanzares v. Commission on Elections, G.R. Nos.
221697 & 221698-700, March 8, 2016, 786 SCRA 1,
904.
48Brion, J., Separate Opinion, Biraogo v. Philippine
Truth Commission of 2010, supra note 45, at 553.
49 See Morales, J., Dissenting Opinion, Central Bank
Employees Assn., Inc. v. Bangko Sentral ng Pilipinas, 487
Phil. 531, 697-698 (2004) as cited by Brion, J.,
Separate Opinion, Biraogo v. Philippine Truth
Commission of 2010, supra note 45, at 553, and Leonen,
J., Separate Opinion, Samahan ng mga Progresibong
Kabataan v. Quezon City, G.R. No. 225442, August 8,
2017.
50Serrano
v. Gallant Maritime Services, Inc., et al., 601
Phil. 245, 298 (2009).
51Id.
52 Brion, J., Separate Concurring Opinion, Sps. Imbong
v. Hon. Ochoa, Jr., et al., 732 Phil. 1, 326- 327 (2014).
53To be valid, the classification must conform to the
following requirements:
1.) It must rest on substantial distinctions.
2.) It must be germane to the purpose of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the same
class. (See PAGCOR v. Bureau of Internal Revenue, 660
Phil. 636, 648 [2011]; Maj. Gen. Garcia v. The Executive
Secretary, et al., 692 Phil. 114, 141-142 [2012]; Corpuz
v. People, 734 Phil. 353, 405 [2014]; Ferrer, Jr. v. Mayor
Bautista, 762 Phil. 233, 277 (2015); Drugstores
Association of the Philippines, Inc. v. National Council on
Disability Affairs, G.R. No. 194561, September 14,
2016, 803 SCRA 25, 55; Ocampo v. Enriquez, G.R. Nos.
225973, 225984, 226097, 226116, 226117, 226120 &
226294, November 8, 2016; and Mindanao Shopping
Destination Corp. v. Duterte, G.R. No. 211093, June 6,
2017).
54 Section 1, Article III of the Constitution states:
Section 1. No person shall be deprived of life, liberty,
or property without due process of law, nor shall any
person be denied the equal protection of the laws.
55Tenchavez
v. Escano, et al., supra note 13, as cited
in Cang v. Court of Appeals, supranote 13;; Llorente v.
Court of Appeals, supra note 13; and Perez v. Court of
Appeals, supra note 13. See also Garcia v. Recio,
supra note 9, at 730; Republic v. Iyoy supra note 13;
and Lavadia v. Heirs of Juan Luces Luna, supra note 13.
FAMILY CODE, Article 26 Paragraph 2. See also Garcia
v. Recio, supra note 9, at 730 and Medina v. Koike,
supranote 10.
56Art. 35. The following marriages shall be void from
the beginning:
(1) Those contracted by any party below eighteen
years of age even with the consent of parents or
guardians;
(2) Those solemnized by any person not legally
authorized to perform marriages unless such
marriages were contracted with either or both parties
170
believing in good faith that the solemnizing officer had
the legal authority to do so;
(3) Those solemnized without a license, except those
covered by the preceding Chapter;
(4) Those bigamous or polygamous marriages not
falling under Article 41;
(5) Those contracted through mistake of one
contracting party as to the identity of the other; and
(6) Those subsequent marriages that are void under
Article 53.
Art. 36. A marriage contracted by any party who, at the
time of the celebration, was psychologically
incapacitated to comply with the essential marital
obligations of marriage, shall likewise be void even if
such incapacity becomes manifest only after its
solemnization. (As amended by E.O. 227)
Art. 37. Marriages between the following are
incestuous and void from the beginning, whether the
relationship between the parties be legitimate or
illegitimate:
(1) Between ascendants and descendants of any
degree; and
(2) Between brothers and sisters, whether of the full
or half blood.
Art. 38. The following marriages shall be void from the
beginning for reasons of public policy:
(1) Between collateral blood relatives, whether
legitimate or illegitimate, up to the fourth civil degree;
(2) Between step-parents and step-children;
(3) Between parents-in-law and children-in-law;
(4) Between the adopting parent and the adopted
child;
(5) Between the surviving spouse of the adopting
parent and the adopted child;
(6) Between the surviving spouse of the adopted child
and the adopter;
(7) Between an adopted child and a legitimate child of
the adopter;
(8) Between the adopted children of the same adopter;
and
(9) Between parties where one, with the intention to
marry the other, killed that other person's spouse or
his or her own spouse. (82)
Art. 41. A marriage contracted by any person during
the subsistence of a previous marriage shall be null
and void, unless before the celebration of the
subsequent marriage, the prior spouse had been
absent for four consecutive years and the spouse
present has a well-founded belief that the absent
spouse was already dead. In case of disappearance
where there is danger of death under the
circumstances set forth in the provisions of Article 391
of the Civil Code, an absence of only two years shall be
sufficient.
For the purpose of contracting the subsequent
marriage under the preceding paragraph, the spouse
present must institute a summary proceeding as
provided in this Code for the declaration of
presumptive death of the absentee, without prejudice
to the effect of reappearance of the absent spouse.
(83a)
Art. 52. The judgment of annulment or of absolute
nullity of the marriage, the partition and distribution
of the properties of the spouses, and the delivery of
the children's presumptive legitimes shall be recorded
in the appropriate civil registry and registries of
property; otherwise, the same shall not affect third
persons, (n)
Art. 53. Either of the former spouses may marry again
after complying with the requirements of the
immediately preceding Article; otherwise, the
subsequent marriage shall be null and void.
57 RULE 131, Section 3(a).
58Id., Section 3(c).
59Id., Section 3(d).
60Id.,
Section 3(x).
61Id., Section 3(aa).
62Id., Section 3(ff).
63Rep. of the Phils. v. Albios, 719 Phil. 622, 636 (2013).
641987 CONSTITUTION, Article XV, Section 2. This
echoed the Family Code provision, which provides:
Art. 1. Marriage is a special contract of permanent
union between a man and a woman entered into in
accordance with law for the establishment of conjugal
and family life. It is the foundation of the family and an
inviolable social institution whose nature,
consequences, and incidents are governed by law and
not subject to stipulation, except that marriage
settlements may fix the property relations during the
marriage within the limits provided by this Code.
65 Bernas, Joaquin G, S.J., THE INTENT OF THE 1986
CONSTITUTION WRITERS, 1995 Edition, pp. 1132,
citing V RECORD 41.
66Record of the Constitutional Commission:
Proceedings and Debates, Volume V, September 24,
1986, p. 41.
67See Garcia Valdez v. Soteraña Tuason, 40 Phil. 943,
944 (1920); Francisco v. Tayao, 50 Phil. 42
(1927); People v. Bitdu, 58 Phil. 817 (1933); Sikat v.
Canson, 61 Phil. 207 (1939); and Arca, et al. v. Javier,
95 Phil. 579 (1954).
68See Baptista v. Castañeda, 16 Phil. 461 (1946); Luz v.
Court of First Instance of Tacloban, 77 Phil. 679 (1946);
and Antonio v. Reyes, 519 Phil. 337 (2006).
69Baptista v. Castañeda, supra, at 463.
70Tenchavezv. Escano, et al.,supra note 13, at 759-760,
as cited in Cang v. Court of Appeals, supra note
13; Llorente v. Court of Appeals, supra note 13;
and Perez v. Court of Appeals, supra note 13. See
also Garcia v. Recio, supra note 9, at 730; Republic v.
Iyoy, supra note 13; and Lavadia v. Heirs of Juan Luces
Luna, 739 Phil. 331, 341-342 (2014).
171
71Entitled "Instituting Absolute Divorce in the
Philippines And For Other Purposes," with
Representative Edcel C. Lagman as Principal Author.
72Entitled "An Act Amending Title I, Chapter 3, of
Executive Order No. 209, Otherwise Known as the
Family Code of the Philippines, Prescribing Additional
Ground for Annulment," with Representative Robert
Ace S. Barbers as Principal Author.
73 Entitled "An Act Introducing Divorce in the
Philippines, Amending for the Purpose Articles 26, 55 to
66 and Repealing Article 36 Under Title II of Executive
Order No. 209, As Amended, Otherwise Known as the
Family Code of the Philippines, and For Other Purposes,"
with Gabriela Women's Party Representatives Emmi
A. De Jesus and Arlene D. Brosas as principal authors.
74Entitled "An Act Providing for Grounds for the
Dissolution of a Marriage," with Representatives Teddy
B. Baguilat, Jr., Rodel M. Batocabe, Arlene D. Brosas,
Ariel B. Casilao, France L. Castro, Nancy A. Catamco,
Pia S. Cayetano, Emmi A. De Jesus, Sarah Jane I. Elago,
Gwendolyn F. Garcia, Ana Cristina Siquian Go, Edcel C.
Lagman, Pantaleon D. Alvarez, Antonio L. Tinio, and
Carlos Isagani T. Zarate as Principal Authors.
See Leonen, J., dissenting in Matudan v. Republic, G.R.
75
No. 203284, November 14, 2016.
76Re:Letter of Tony Q. Valenciano, A.M. No. 10-4-19-SC
(Resolution), March 7, 2017.
77See Sps. Imbong, et al. v. Hon. Ochoa, Jr., et al., 732
Phil. 1, 167 (2014).
78Tilar v. Tilar, G.R. No. 214529, July 12, 2017.
79 Article XV, Section 1.
80 Article XV, Section 3(2).
81Article II, Sections 11, 12 and 14. See also Republic
Act Nos. 7192 ("Women in Development and Nation
Building Act") and 9710 ("The Magna Carta of
Women").
82 Bernas, Joaquin G, S.J., THE INTENT OF THE 1986
CONSTITUTION WRITERS, 1995 Edition, pp. 1132,
citing V RECORD 40, 44.
83 See Paras v. Paras, 555 Phil. 786, 804 (2007)
84San Luis v. San Luis, supra note 16, at 292-293.
85Supra note 16.
86San Luis v. San Luis, supra note 16, at 293-294.
87Republic of the Phils. v. Orbecido III, supra note 16, at
115.
88Id.
89Garcia v. Recio, supra note 9, at 731, as cited in Vda.
de Catalan v. Catalan-Lee, supranote 23, at 501.
90Fujikiv. Marinay, supra note 20, at 544 and Vda. de
Catalan v. Catalan-Lee, supra note 23, at 499.
91Garcia v. Recio, supra note 9, at 731, as cited
in Medina v. Koike, supra note 10 and Republic of the
Phils. v. Orbecido III, supra note 16, at 116. See
also Bayot v. The Hon. Court of Appeals, et al., 591 Phil.
452, 470 (2008).
92Garcia v. Recio, supra note 9, at 732-733. (Citations
omitted). See also Vda. de Catalan v. Catalan-Lee,
supra note 23, at 499 and 501-502 and San Luis v. San
Luis, supra note 16, at 294.
93Rollo, pp. 29-30.
94Garcia v. Recio, supra note 9, at 733-734.
95See Bayot v. The Hon. Court of Appeals, et al.,
supra note 75, at 470-471; and Roehr v. Rodriguez,
supra note, 23, at 617.
96Garcia
v. Recio, supra note 9, at 735. (Citations
omitted). See also Vda. de Catalan v. Catalan- Lee,
supra note 23, at 500-501; San Luis v. San Luis,
supra note 16, at 295; Republic of the Phils. v. Orbecido
III, supra note 16, at 116; and Llorente v. Court of
Appeals, supra note 13, at 354.
NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on April 24, 2018 a
Decision/Resolution, copy attached herewith, was
rendered by the Supreme Court in the above-entitled
case, the original of which was received by this Office
on May 17, 2018 at 3:15 p.m.
Very truly yours,
(SGD.) EDGAR O. ARICHETA
Clerk of Court
CONCURRING OPINION
LEONEN, J.:
I concur with the ponencia of Justice Peralta, adding
the following points.
I
The proposal of the Solicitor General is to give Article
261 of our Family Code an interpretation which
172
capacitates and empowers the Japanese husband the
option to divorce and how such choice has effects in
our country while, at the same time, disallowing the
Filipina wife from being able to do the same simply
because she is a Filipina.
That interpretation may be unconstitutional. Article II,
Section 14 of our Constitution provides:
Section 14. The State recognizes the role of women in
nation-building, and shall ensure the fundamental
equality before the law of women and men.
This constitutional fiat advances the notion of gender
equality from its passive formulation in Article III,
Section 12 to its more active orientation.
Article III, Section 1 simply states that "nor shall any
person be denied the equal protection of the laws."
Traditionally, this means that the State has no duty to
find ways and means to ensure equality. It is only a
prescription that whatever legal burdens and benefits
are given to men should likewise be given to women. It
does not require the State, through any of its organs, to
find affirmative ways and means to battle the
patriarchy—that complex of political, cultural, and
economic factors that ensure women's
disempowerment.
By enacting our Constitution and signing on to our
political obligations to the Convention on the
Elimination of All Forms of Discrimination Against
Women, we have legally committed to do better.
We likewise note that the Family Code was followed
by Republic Act No. 7192 or the Women in
Development and Nation Building Act. Within this law
are provisions which ensure equal treatment between
men and women, thus:
Section 2. Declaration of Policy. - The State recognizes
the role of women in nation building and shall ensure
the fundamental equality before the law of women and
men. The State shall provide women rights and
opportunities equal to that of men.
....
Section 5. Equality in Capacity to Act. - Women of legal
age, regardless of civil status, shall have the capacity to
act and enter into contracts which shall in every
respect be equal to that of men under similar
circumstances.
In all contractual obligations where married men have
the capacity to act, married women shall have equal
rights.
To this end:
(1) Women shall have the capacity to borrow and
obtain loans and execute security and credit
arrangements under the same conditions as
men;
(2) Women shall have equal access to all
government and private sector programs
granting agricultural credit, loans and non-
material resources and shall enjoy equal
treatment in agrarian reform and land
resettlement programs;
(3) Women shall have equal rights to act as
incorporators and enter into insurance
contracts; and
(4) Married women shall have the rights equal to
those of married men in applying for passports,
secure visas and other travel documents,
without need to secure the consent of their
spouses.
In all other similar contractual relations, women shall
enjoy equal rights and shall have the capacity to act
which shall in every respect be equal to those of men
under similar circumstances. (Underscoring supplied)
Republic Act No. 9710 or the Magna Carta of Women
reflects the state policy to "[abolish]. . . the unequal
structures and practices that perpetuate
discrimination and inequality"3between the sexes, and
Section 19 of the law is specific on the equality of
women and men as to rights relating to marriage and
family relations:
Section 19. Equal Rights in All Matters Relating to
Marriage and Family Relations. - The State shall take
all appropriate measures to eliminate discrimination
against women in all matters relating to marriage and
family relations and shall ensure:
(a) the same rights to enter into and leave
marriages or common law relationships referred
to under the Family Code without prejudice to
personal and religious beliefs;
(b) the same rights to choose freely a spouse and to
enter into marriage only with their free and full
consent. The betrothal and the marriage of a
child shall have no legal effect;
(c) the joint decision on the number and spacing of
their children and to have access to the
information, education and means to enable
them to exercise these rights;
(d) the same personal rights between spouses or
common law spouses including the right to
choose freely a profession and an occupation;
(e) the same rights for both spouses or common law
173

spouses in respect of the ownership, acquisition,
management, administration, enjoyment, and
disposition of property;
(f) the same rights to properties and resources,
whether titled or not, and inheritance, whether
formal or customary; and
(g) women shall have equal rights with men to
acquire, change, or retain their nationality. The
State shall ensure in particular that neither
marriage to an alien nor change of nationality by
the husband during marriage shall automatically
change the nationality of the wife, render her
stateless or force upon her the nationality of the
husband. Various statutes of other countries
concerning dual citizenship that may be enjoyed
equally by women and men shall likewise be
considered.
Customary laws shall be respected: Provided, however,
That they do not discriminate against women.
(Underscoring supplied)
Section 19 is straightforward: the State shall ensure
that men and women are to have "the same rights to
enter into and leave marriages."
Following section 19 of Republic Act No. 9710, Article
26 of the Family Code should be read to mean that
who initiates the divorce proceedings abroad is
immaterial. Once a divorce decree is issued, the
foreign spouse is deemed to have "obtained" a divorce
which capacitates him or her to remarry. The same
status should therefore be afforded to the Filipino
spouse.
Besides, in many jurisdictions, the foreign spouse is
given the option to divorce on the basis of a mutual
recognition that irreconcilable differences have
surfaced in the context of their relationship. Some
foreign laws, therefore, allow joint filing for a divorce
decree to ensure that there be less incrimination
among the spouses, a more civil and welcoming
atmosphere for their children, and less financial
burden for the families affected. The interpretation
proposed by the Solicitor General does not
accommodate this possibility. It is blind to the actual
complexities experienced by our citizens in mixed
marriages.
II
Justice Caguioa provides the argument that
interpreting Article 26 of the Family Code in the
manner provided in the ponencia violates the
nationality principle enshrined in Article 15 of the
Civil Code.
I disagree.
Article 15 of the Civil Code provides:
Article 15. Laws relating to family rights and duties, or
to the status, condition and legal capacity of persons
are binding upon citizens of the Philippines, even
though living abroad.
Clearly, it is not only Article 26 of the Family Code or
the Civil Code that applies. It should also include the
Constitution, which is the bedrock of rights of any
citizen. Thus, the State's obligation to "ensure the
fundamental equality before the law of women and
men"4applies with equal if not greater force. In my
view, this is the full extent of the nationality principle.
It is borne of rational interpretation, not judicial
legislation.
III
Finally, my agreement with the ponencia is also
impelled by my understanding that divorce is more
consistent with the constitutionally entrenched
fundamental freedoms inherent in individuals as
human beings. It is also most consistent with the
constitutional command for the State to ensure human
dignity.
The restrictive nature of our marriage laws tends to
reify the concept of a family which is already far from
the living realities of many couples and children. For
instance, orthodox insistence on heteronormativity
may not compare with the various types of care that
various other "non-traditional" arrangements present
in many loving households.
The worst thing we do in a human relationship is to
regard the commitment of the other formulaic. That is,
that it is shaped alone by legal duty or what those who
are dominant in government regard as romantic. In
truth, each commitment is unique, borne of its own
personal history, ennobled by the sacrifices it has gone
through, and defined by the intimacy which only the
autonomy of the parties creates.
In other words, words that describe when we love or
are loved will always be different for each couple. It is
that which we should understand: intimacies that
form the core of our beings should be as free as
possible, bound not by social expectations but by the
care and love each person can bring.
Yet, the present form and the present interpretation
we have on the law on marriage constrains. In love,
there are no guarantees. In choosing our most intimate
partners, we can commit mistakes. It is but part of
being human.
Our law cruelly defines the normal. The legal is coated
in a false sense of morality poorly reasoned. It
condemns those who have made bad choices into a
living inferno.
In my view, this case is a step forward in the right
direction.
IV
As I stated in a dissent5 I wrote in 2016, we had
absolute divorce laws in the past. Act No.
2710,6 enacted in 1917, allowed the filing of a petition
174
for divorce on the ground of adultery on the part of the
wife, or concubinage on the part of the husband.7
Eleven grounds for divorce were provided in
Executive Order No. 141,8 effective during the
Japanese occupation. These grounds included
"intentional or unjustified desertion continuously for
at least one year prior to the filing of a [petition] for
divorce" and "slander by deed or gross insult by one
spouse against the other to such an extent as to make
further living impracticable."9
After the Japanese left, the laws they enacted were
declared void.10 Act No. 2710 again took effect until
the Civil Code's enactment in 1950. Since then,
absolute divorce has been prohibited in our
jurisdiction.
A world whose borders are increasingly becoming
permeable with the ease of travel as well as with the
technological advances will definitely foster more
inter-cultural relationships. These relationships can
become more intimate.
I am of the belief that the law never intended for the
Filipino to be at a disadvantage. For so long as the
Constitution itself guarantees fundamental equality,
the absurd result from a literal and almost frigid and
unfeeling interpretation of our laws should not hold.
To say that one spouse may divorce and the other may
not contributes to the patriarchy. It fosters an unequal
relationship prone to abuse in such intimate
relationships.
The law is far from frigid. It should passionately
guarantee equality and I stand with this Court in
ensuring that it does.
ACCORDINGLY, I vote to deny the Petition for Review
on Certiorari and to affirm, with modification, the
Court of Appeals' Decision in CA-G.R. CV No. 100076.
The case should be remanded to the court of origin for
further proceedings and reception of evidence as to
the relevant Japanese law on divorce.
1 FAMILY CODE, art. 26 provides:
Article 26. All marriages solemnized outside the
Philippines, in accordance with the laws in force in the
country where they were solemnized, and valid there
as such, shall also be valid in this country, except those
prohibited under Articles 35 (1), (4), (5) and (6), 3637
and 38.
Where a marriage between a Filipino citizen and a
foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse
shall have capacity to remarry under Philippine law.
2 CONST, art. III, sec. 1 provides:
Section 1. No person shall be deprived of life, liberty,
or property without due process of law, nor shall any
person be denied the equal protection of the laws.
3 Rep. Act No. 9710, sec. 2 provides:
Section 2. Declaration of Policy. - Recognizing that the
economic, political, and sociocultural realities affect
women's current condition, the State affirms the role
of women in nation building and ensures the
substantive equality of women and men. It shall
promote empowerment of women and pursue equal
opportunities for women and men and ensure equal
access to resources and to development results and
outcome. Further, the State realizes that equality of
men and women entails the abolition of the unequal
structures and practices that perpetuate
discrimination and inequality. To realize this, the State
shall endeavor to develop plans, policies, programs,
measures, and mechanisms to address discrimination
and inequality in the economic, political, social, and
cultural life of women and men. The State condemns
discrimination against women in all its forms and
pursues by all appropriate means and without delay
the policy of eliminating discrimination against
women in keeping with the Convention on the
Elimination of All Forms of Discrimination Against
Women (CEDAW) and other international instruments
consistent with Philippine law. The State shall accord
women the rights, protection, and opportunities
available to every member of society.
The State affirms women's rights as human rights and
shall intensify its efforts to fulfill its duties under
international and domestic law to recognize, respect,
protect, fulfill, and promote all human rights and
fundamental freedoms of women, especially
marginalized women, in the economic, social, political,
cultural, and other fields without distinction or
discrimination on account of class, age, sex, gender,
language, ethnicity, religion, ideology, disability,
education, and status. The State shall provide the
necessary mechanisms to enforce women's rights and
adopt and undertake all legal measures necessary to
foster and promote the equal opportunity for women
to participate in and contribute to the development of
the political, economic, social, and cultural realms.
The State, in ensuring the full integration of women's
concerns in the mainstream of development, shall
provide ample opportunities to enhance and develop
their skills, acquire productive employment and
contribute to their families and communities to the
fullest of their capabilities.
In pursuance of this policy, the State reaffirms the
right of women in all sectors to participate in policy
formulation, planning, organization, implementation,
management, monitoring, and evaluation of all
programs, projects, and services. It shall support
policies, researches, technology, and training
programs and other support services such as
financing, production, and marketing to encourage
active participation of women in national
development.
4 CONST., art. II, sec. 14.
5See Dissenting Opinion in Matudan v. Republic, G.R.
No. 203284, November 14, 2016, <
http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=
/jurisprudence/2016/november2016/203284. pdf >
[Per J. Del Castillo, Second Division].
175
6 An Act to Establish Divorce (1917).
7 Act. No. 2710, sec. 1 provides:
Section 1. A petition for divorce can only be filed for
adultery on the part of the wife or concubinage on the
part of the husband, committed in any of the forms
described in article four hundred and thirty-seven of
the Penal Code.
See Valdez v. Tuazon, 40 Phil. 943, 948 (1920) [Per J.
Street, En Banc].
8 Otherwise known as "The New Divorce Law."
9Baptistav. Castañeda, 76 Phil. 461, 462 (1946) [Per J.
Ozaeta, En Banc].
10Id. at 462-463.
DISSENTING OPINION
CAGUIOA, J.:
The Supreme Court x x x aims to adopt a liberal
construction of statutes. By liberal construction of
statutes is meant that method by which courts from
the language used, the subject matter, and the
purposes of those framing laws, are able to find out
their true meaning. There is a sharp distinction,
however, between construction of this nature and
the act of a court in engrafting upon a law
something that has been omitted which someone
believes ought to have been embraced. The former
is liberal construction and is a legitimate exercise of
judicial power. The latter is judicial legislation
forbidden by the tripartite division of powers
among the three departments of government, the
executive, the legislative, and the judicial.1
On the basis of the Court's rulings in Van Dorn v.
Romillo, Jr.2(Van Dorn), Republic of the Philippines v.
Orbecido III3(Orbecido), and Dacasin v.
Dacasin (Dacasin), the ponencia holds that Article
4
26(2) of the Family Code permits
the blanket recognition, under Philippine law, of a
divorce decree obtained abroad by a Filipino citizen
against the latter's foreigner spouse.
I disagree.
At the outset, it bears to emphasize that the public
policy against absolute divorce remains in force. At
present, there exists no legal mechanism under
Philippine law through which a Filipino may secure a
divorce decree upon his own initiative. Accordingly, it
is the Court's duty to uphold such policy and apply the
law as it currently stands until the passage of an
amendatory law on the subject.
As members of the Court, ours is the duty to interpret
the law; this duty does not carry with it the power to
determine what the law should be in the face of
changing times, which power, in turn, lies solely
within the province of Congress.
Article 26(2) of the Family Code is an exception to the
nationality principle under Article 15 of the Civil Code.
Article 26(2) was introduced during the meetings of
the Joint Civil Code and Family Law Committee (the
Committee) to address the effect of foreign divorce
decrees on mixed marriages between Filipinos and
foreigners. The provision, as originally worded, and
the rationale for its introduction, appear in the
deliberations:
[Professor Esteban B. Bautista (Prof. Bautista)]'s
position, even under the present law, was that the
Filipina wife should be allowed to remarry as long as
the divorce is valid under the national law of the
husband, with which [Judge Alicia Sempio-Diy (Judge
Diy)] and [Justice Leonor Ines-Luciano (Justice
Luciano)] concurred.
After further deliberation, [Justice Ricardo C. Puno
(Justice Puno)] suggested that they formulate the base
to cover the above situation. Judge Diy and [Justice
Eduardo P. Caguioa (Justice Caguioa)] formulated the
base as follows:
In a mixed marriage between a Filipino citizen and a
foreigner, both capacitated to marry under Philippine
law, in case the foreigner should obtain a valid divorce
abroad, capacitating him to remarry, the Filipino
spouse shall likewise have capacity to remarry under
Philippine law.5
However, subsequent deliberations show that the
Committee ultimately resolved to delete the provision
and defer action until absolute divorce is determined
in future legislation:
On Article [26(2)], [Justice Jose B.L. Reyes (Justice
Reyes)] commented that it seems to discriminate
against Filipinos, who are married to Filipinos, since
the provision governs only Filipinos married to
foreigners.
Justice Puno suggested that, in line with Justice
Caguioa's view that xxx they should make the
Proposed Family Code as acceptable as possible and
since they are not touching on divorce which is one of
the big issues and they are leaving it to future
legislation, they omit Article 126(2)] temporarily
and take it up when they take up the matter of
absolute divorce.
Prof. Bautista remarked that it is a matter of equity,
justice and fairness that Article [26(2)] should be
retained. On the point raised by Justice Reyes, Prof.
Bautista opined that there is no unfairness in the case
of a Filipino, who is married to a Filipino, because in
the case of a Filipino who is married to a foreigner, the
foreigner is already free, and yet the Filipino is still
married to nobody. [Dean Bartolome S. Carale (Dean
Carale)] added that if two Filipinos are married
176
anywhere, they are both covered by the Philippine
prohibitory laws because they are nationals of the
Philippines. Justice Caguioa, however, pointed out that,
in effect, there is preferential treatment in the case of
Filipinos married to foreigners, since if the foreigner
gets a divorce, the Filipino spouse also automatically
gets a divorce. Dean Carale remarked that Article
[26(2)] will in effect encourage Filipinos to marry
foreigners. Prof. Bautista disagreed since it is the
foreigner and not the Filipino, who will seek
divorce.
xxxx
Justice Reyes remarked that this article is
an implicit recognition of foreign divorce, with
which Justice Caguioa concurred. Prof. Bautista
and [Professor Flerida Ruth P. Romero (Prof.
Romero)] pointed out that the article will only
cover exceptional cases and special situations and
that there is a reasonable and substantial basis for
making it an exception.
After further discussion, Justice Puno rephrased
Article [26(2)] in accordance with Dr. Cortes'
suggestion as follows:
Where a marriage between a Filipino citizen and a
foreigner is validly celebrated abroad and a divorce is
thereafter validly obtained abroad capacitating such
foreigner to remarry, the Filipino spouse shall likewise
have capacity to remarry under Philippine law.
xxxx
Having sufficiently discussed the matter, the
Committee decided to put the issue to a vote.
The members voted as follows:
(1) Justice Puno, Justice Caguioa, Dr. Cortes, Dean
Carale, Dean Gupit and Prof. Baviera were for the
deletion of Article [26(2)].
(2) Justice Diy, Prof. Bautista, Prof. Romero and
[Director Flora C. Eufemio] were for its retention.
Hence, the Committee agreed that x x x Article
[26(2)] shall be deleted x x x.6(Emphasis and
underscoring supplied)
Accordingly, Article 26(2) did not appear in the initial
version of the Family Code under Executive Order
(EO) 209 which was signed into law by then President
Corazon Aquino on July 6, 1987. Days later, or on July
17, 1987, President Aquino issued EO 227 which
incorporated, among others, Article 26(2). Thus, when
the Family Code finally took effect on August 3, 1988,
Article 26, in its entirety, read as follows:
ART. 26. All marriages solemnized outside the
Philippines, in accordance with the laws in force in the
country where they were solemnized, and valid there
as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37
and 38.
Where a marriage between a Filipino citizen and a
foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse
shall likewise have capacity to remarry under
Philippine law.
While Article 26(2) was reinstated by executive fiat, it
is nevertheless clear that the true spirit behind the
provision remains explicit in the Committee
deliberations — Article 26(2) had been crafted to
serve as an exception to the nationality principle
embodied in Article 15 of the Civil Code, which
states:
ART. 15. Laws relating to family rights and duties, or
to the status, condition and legal capacity of persons
are binding upon citizens of the Philippines, even
though living abroad.
The deliberations show that Article 26(2) has the
effect of (i) enforcing divorce decrees which are
binding on foreign nationals under their national law;
and (ii) recognizing the residual effect of such foreign
divorce decrees on their Filipino spouses who are
bound by the prohibition against absolute divorce
under the Civil Code.7
To be sure, Article 26(2) had not been crafted to dilute
the Philippines' policy against absolute divorce. In fact,
this perceived possible dilution is precisely what
prompted the majority of the Committee members to
vote for the deletion of Article 26(2) in the initial
version of the Family Code found in EO 209. As the
deliberations indicate, the exception provided in
Article 26(2) is narrow, and intended only to
address the unfair situation that results when a
foreign national obtains a divorce decree against a
Filipino citizen, leaving the latter stuck in a
marriage without a spouse, thus:
Justice Caguioa explained that the intention of the
provision is to legalize foreign divorces for the Filipino
so that in the case of a Filipina, who was married to an
American, who in turn later secured a divorce, said
Filipina will be allowed to remarry. Justice Puno and
Judge Diy remarked that this is not clear in the
provision [Article 26(2)]. Justice Puno, however,
commented that it will open the gates to
practically invalidating the Philippine laws by the
simple expedient of marrying a foreigner, and that
it will be an additional cause for the breakage of
families, with which Justice Caguioa concurred.
Judge Diy stated that, on the other hand, it is an
absurdity for a Filipina to be married without a
husband.8 (Emphasis supplied)
I believe that this view is consistent with the Court's
rulings in Van Dorn, Orbecido, and Dacasin.
In Van Dorn, a case decided prior to the enactment of
the Family Code, an American citizen sought to compel
his former Filipina wife to render an accounting of
their alleged conjugal business in Manila. The
American citizen argued that he retained the right to
share in the proceeds of the disputed business, as the
divorce decree issued by the Nevada District Court
cannot be given effect in the Philippines. Ruling
against the American citizen, the Court held that the
177
divorce decree issued by a United States court is
binding against him as an American citizen.9As
a residual effect of such divorce, the American
citizen no longer had standing to sue as the
husband of his former Filipina wife.10Hence, in Van
Dorn, the Court held:
It is true that owing to the nationality principle
embodied in Article 15 of the Civil Code, only
Philippine nationals are covered by the policy against
absolute divorces the same being considered contrary
to our concept of public policy and morality.
However, aliens may obtain divorces abroad, which
may be recognized in the Philippines, provided
they are valid according to their national law. x x
x11 (Emphasis supplied)
In Orbecido, a Filipino citizen sought permission to
remarry before the courts, claiming that his former
Filipina wife had obtained a divorce decree against
him from an American court after she had become a
naturalized American citizen. The Court held that the
effects of the divorce decree should be recognized
in the Philippines since it was obtained by the
former wife as an American citizen in accordance
with her national law, and that as a consequence,
the Filipino husband should be allowed to remarry
pursuant to Article 26(2). In so ruling, the Court laid
down elements for the application of Article 26(2),
thus:
In view of the foregoing, we state the twin elements
for the application of Paragraph 2 of Article 26 as
follows:
1. There is a valid marriage that has been celebrated
between a Filipino citizen and a foreigner; and
2. A valid divorce is obtained abroad by the alien
spouse capacitating him or her to remarry.
The reckoning point is not the citizenship of the
parties at the time of the celebration of the marriage,
but their citizenship at the time a valid divorce is
obtained abroad by the alien spouse capacitating the
latter to remarry.
In this case, when [the Filipino spouse's] wife was
naturalized as an American citizen, there was still a
valid marriage that has been celebrated between
[them]. As fate would have it, the naturalized alien
wife subsequently obtained a valid divorce
capacitating her to remarry. Clearly, the twin
requisites for the application of Paragraph 2 of Article
26 are both present in this case. Thus x x x the
"divorced" Filipino spouse, should be allowed to
remarry.12 (Emphasis and underscoring supplied)
Still, in Dacasin, a Filipino wife secured a divorce
decree against her American husband from an Illinois
court. The decree awarded sole custody over the
parties' daughter in favor of the Filipino wife. While
the parties subsequently executed a Joint Custody
Agreement, the Filipino wife refused to honor the
agreement, prompting the American husband to seek
redress before the Philippine courts. The Court held
that the Illinois divorce decree is binding on the
American citizen, and that the latter cannot be
permitted to evade the terms of the custodial
award. Citing the nationality principle, the Court
stressed that "a foreign divorce decree carries as
much validity against the alien divorcee in this
jurisdictionas it does in the jurisdiction of the
alien's nationality, irrespective of who obtained
the divorce."13 It bears stressing that the issue raised
in Dacasin was the enforceability of the Joint Custody
Agreement against the American husband, and not the
validity of the foreign divorce decree as against the
Filipino wife.
Thus, rather than serving as bases for the blanket
recognition of foreign divorce decrees in the
Philippines, I believe that the Court's rulings
in Van Dorn, Orbecido and Dacasin merely clarify
the parameters for the application of the
nationality principle found in Article 15 of the Civil
Code, and the exception thereto found in Article
26(2) the Family Code. These parameters may be
summarized as follows:
1. Owing to the nationality principle, all Filipino
citizens are covered by the prohibition against
absolute divorce. As a consequence of such
prohibition, a divorce decree obtained
abroad by a Filipino citizen cannot be
enforced in the Philippines. To allow
otherwise would be to permit a Filipino
citizen to invoke foreign law to evade an
express prohibition under Philippine law.
2. Nevertheless, the effects of a divorce decree
obtained by a foreign national may be
extended to the Filipino spouse, provided the
latter is able to prove (i) the issuance of the
divorce decree, and (ii) the personal law of
the foreign spouse allowing such
divorce.14 This exception, found under Article
26(2) of the Family Code, respects the binding
effect of the divorce decree on the foreign
national, and merely recognizes the residual
effect of such decree on the Filipino spouse.
It should be emphasized, however, that the prohibition
against absolute divorce only applies to Filipino
citizens. Accordingly, it cannot be invoked by a foreign
national to evade the effects of a divorce decree issued
pursuant to his national law. To reiterate, a divorce
decree issued by a foreign court remains binding
on the foreign spouse in the Philippines,
regardless of the party who obtained the
same provided that such decree is valid and
effective under the foreign spouse's national law.
In essence, the applicable rule (whether Article 15 of
the Civil Code on one hand, or Article 26[2] of the
Family Code on the other), is determined by (i) the law
upon which the divorce decree had been issued; (ii)
the party who obtained the divorce decree; (iii) the
nature of the action brought before the Philippine
courts; and (iv) the law governing the personal status
of the party seeking relief.
The corresponding effect of these determining factors
are, in turn, illustrated by the relevant cases involving
the issue at hand, decided after the issuance of EO 227:
Case Incidents of Incidents Court's
178
 Divorce of Action Resolutio
as o wife
in the n
additi obtain
Philippin
onal ed the
es
groun same
d to while
Pilapil v.
Divorce Germa The grant still a
Ibay-
obtained in n divorc his Filipin
Somera15
Germany by spous e petitio o
(Pilapil)
German e filed decree n for citizen,
spouse two is declar and
(2) bindin ation was, at
compl g on of such
aints the nullity time,
chargi Germa bound
ng n by
Filipin spouse Philipp
o pursua ine
spous nt to laws
e with the on
adulte nation family
ry ality rights
princip and
le. duties,
Accord pursua
ingly, nt to
the the
Germa nation
n ality
spouse princip
lacks le.
standi
ng to
Orbecido
file the Divorce Filipin The
compl obtained in o effects
aints the United spous of the
as States by e divorc
"offen naturalized sought e
ded American enforc decree
spouse spouse ement must
", of be
having divorc recogn
obtain e in ized in
ed the the favor
divorc Philip of the
e pines Filipin
decree o
prior spouse
to the pursua
filing nt to
of said Article
compl 26(2)
aints. of the
Family
Code.
Republic
Divorce Filipin The Accord
v.
obtained in o divorc ingly,
Iyoy16(Iy
the United husba e the
oy)
States by nd decree Filipin
Filipino wife invoke cannot o
prior to her s the be spouse
naturalizatio divorc recogn should
n as an e ized in be
American decree the allowe
citizen secure Philipp d to re-
d by ines marry.
his since
Filipin the
o wife Filipin

179
Dacasin
Divorce Ameri The Regio cause
obtained in can divorc nal of
the United spous e Trial action
States by e decree Court before
Filipino sought is (RTC) the
spouse enforc bindin RTC,
ement g on as a
of the the petitio
Joint Americ n for
Custo an annul
dy spouse ment
Agree , presup
ment pursua poses
he had nt to a
execut the subsist
ed nation ing
with ality marria
his princip ge.
forme le.
r Accord
Filipin ingly, Fujiki v.
Marinay1 Divorce First The
o wife, he 8(Fujiki) obtained in husba effect
which cannot Japan by nd of the
bore be Filipina wife (also a divorc
terms allowe against her Japane e
contra d to second se decree
ry to evade husband, nation issued
those the who is a al) pursua
in the same Japanese sought nt to
divorc by national recogn Japane
e invoki ition se law
decree ng the of the may be
terms divorc recogn
of the e ized in
Joint obtain the
Custod ed by Philipp
y his ines in
Agree Filipin order
ment. a wife to
agains affect
Bayot v. t her the
Court, of Divorce Natur The secon status
Appeals17 obtained in alized divorc d of the
(Bayot) the Ameri e husba first
Dominican can decree nd husba
Republic by spous is throug nd,
naturalized e bindin h a who,
American sought g on Petitio pursua
spouse annul the n for nt to
ment natura Judicia the
of her lized l nation
marria Americ Recog ality
ge an nition princip
with spouse of le, is
her , Foreig govern
Filipin pursua n ed by
o nt to Judgm Japane
spous the ent (or se law.
e nation Decre Such
throug ality e of recogn
h a princip Absolu ition is
petitio le. te in line
n for Accord Nullity with
annul ingly, of the
ment she is Marria Philipp
filed left ge) ines'
before withou filed public
the t any before policy,

180
 foreigner gets a divorce, the Filipino spouse also
the which automatically gets a divorce. Dean Carale remarked
RTC charac that Article [26(2)] will in effect encourage Filipinos to
terizes marry foreigners. Prof. Bautista disagreed since it is
bigam the foreigner and not the Filipino, who will seek
ous divorce.
marria
ges as xxxx
void a
b Justice Reyes remarked that this article is
initio. an implicit recognition of foreign divorce, with
which Justice Caguioa concurred. Prof. Bautista
Medina v. and Prof. Romero pointed out that the article will
Koike19( Divorcejoint Filipin The only cover exceptional cases and special situations
Medina) lyobtained a wife case and that there is a reasonable and substantial
in Japan by sought was basis for making it an exception.20 (Emphasis and
Filipina wife to reman underscoring supplied)
and enforc ded to
Japanese e the the CA Consistent with the foregoing, the Court held in Iyoy:
husband divorc to
e in allow
As it is worded, Article 26, paragraph 2, refers to a
the Filipin
special situation wherein one of the [parties in the
Philip a wife
marriage] is a foreigner who divorces his or her
pines to
Filipino spouse. By its plain and literal interpretation,
throug prove
the said provision cannot be applied to the case of
h a that
respondent Crasus and his wife Fely because at the time
Petitio the
Fely obtained her divorce, she was still, a Filipino
n for divorc
citizen. x x x At the time she filed for divorce, Fely
Judicia e
was still a Filipino citizen, and pursuant to the
l obtain
nationality principle embodied in Article 15 of the
Recog ed
Civil Code of the Philippines, she was still bound by
nition abroad
Philippine laws on family rights and duties, status,
of by
condition, and legal capacity, even when she was
Foreig her an
already living abroad. Philippine laws, then and
n dher
even until now, do not allow and recognize divorce
Divorc Japane
between Filipino spouses. Thus, Fely could not
e and se
have validly obtained a divorce from respondent
Declar husba
Crasus.21 (Emphasis and underscoring supplied)
ation nd is
of valid
Capaci accord Article 26(2) of the Family Code merely recognizes the
ty to ing to classification previously made pursuant to the
Remar the nationality principle.
ry latter's
before nation
the al law. The ponencia characterizes Article 26(2) of the Family
RTC Code as unconstitutional, as it proceeds from a
"superficial [and] arbitrary" classification.22 This
position appears to be based on the premise that
The factual circumstances in the foregoing cases Article 26(2) creates new distinctions in itself. This
illustrate and confirm the legislative intent behind premise, however, is simply erroneous.
Article 26(2), that is, primarily, to recognize foreign
divorce decrees secured by foreign nationals insofar as The classification under Article 26(2), (that is,
they affect Filipinos who would otherwise be between Filipinos in mixed marriages and Filipinos
precluded from invoking such decrees in our married to fellow Filipinos) was created as a matter of
jurisdiction, and, as well, to recognize those foreign necessity, in recognition of the classification between
divorce decrees obtained by Filipinos insofar as they Filipinos and foreign nationals which had been created
affect their foreign spouses whose national laws allow by Article 15 of the Civil Code decades prior.
divorce. For emphasis, I quote the relevant portion of
the deliberations: In his Separate Opinion in Pilapil, Justice Paras
highlights the interplay between these two provisions,
Prof. Bautista remarked that it is a matter of equity, thus:
justice and fairness that Article [26(2)] should be
retained, x x x Dean Carale added that if two Filipinos In the case of Recto v. Harden (100 Phil. 427 [1956]),
are married anywhere, they are both covered by the the Supreme Court considered the absolute divorce
Philippine prohibitory laws because they are nationals between the American husband and his American wife
of the Philippines. Justice Caguioa, however, pointed as valid and binding in the Philippines on the theory
out that, in effect, there is preferential treatment in the that their status and capacity are governed by
case of Filipinos married to foreigners, since if the their National law, namely, American law. There is no

181
decision yet of the Supreme Court regarding the
validity of such a divorce if one of the parties, say an
American, is married to a Filipino wife, for then two
(2) different nationalities would be involved.
In the book of Senate President Jovito Salonga entitled
Private International Law and precisely because of
the National law doctrine, he considers the absolute
divorce as valid insofar as the American husband is
concerned but void insofar as the Filipino wife is
involved. This results in what he calls a "socially
grotesque situation," where a Filipino woman is still
married to a man who is no longer her husband. It is
the opinion however, of the undersigned that very
likely the opposite expresses the correct view. While
under the national law of the husband the absolute
divorce will be valid, still one of the exceptions to
the application of the proper foreign law (one of
the exceptions to comity) is when the foreign law
will work an injustice or injury to the people or
residents of the forum. Consequently since to
recognize the absolute divorce as valid on the part
of the husband would be injurious or prejudicial to
the Filipino wife whose marriage would be still
valid under her national law, it would seem that
under our law existing before the new Family Code
(which took effect on August 3, 1988) the divorce
should be considered void both with respect to the
American husband and the Filipino
wife.23 (Emphasis supplied)
Hence, to characterize Article 26(2) as
unconstitutional in such respect would be to disregard
the nationality principle and the reasons which render
the adoption thereof necessary; it would be
tantamount to insisting that Filipinos should be
governed with whatever law they choose.
Article 26(2) of the Family Code rests on substantial and
reasonable distinctions.
It has been argued that the verba legis interpretation
of Article 26(2) of the Family Code violates the equal
protection clause, and that the application of the
provision in this manner would not only be
oppressive, but likewise unconstitutional.
These reservations appear to proceed from three
different classifications which, in turn, have been
called into question — first, that between Filipinos in
mixed marriages and Filipinos who are married to
fellow Filipinos; second, that between Filipinos and
foreigners; and finally, that between men and women.
As earlier discussed, the ponencia finds the first
classification "superficial [and] arbitrary"24 insofar as
it limits the scope of recognition to cover only those
divorce decrees obtained by foreign nationals.
It bears to stress, however, that the guarantee of equal
protection under the Constitution does not require
that all laws indiscriminately operate with equal force
with respect to all subjects at all times;25the guarantee
does not preclude classification provided they are
reasonable and based on substantial distinctions.26
The guaranty of equal protection of the laws is not a
guaranty of equality in the application of the laws
upon all citizens of the state. It is not, therefore, a
requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman
and child should be affected alike by a
statute. Equality of operation of statutes does not
mean indiscriminate operation on persons merely
as such, but on persons according to the
circumstances surrounding them. It guarantees
equality, not identity of rights. The Constitution
does not require that things which are different in
fact be treated in law as though they were the
same. The equal protection clause does not forbid
discrimination as to things that are different. It does
not prohibit legislation which is limited either in
the object to which it is directed or by the territory
within which it is to operate.
The equal protection of the laws clause of the
Constitution allows classification. Classification in law,
as in the other departments of knowledge or practice,
is the grouping of things in speculation or practice
because they agree with one another in certain
particulars. A law is not invalid because of simple
inequality. The very idea of classification is that of
inequality, so that it goes without saying that the mere
fact of inequality in no manner determines the matter
of constitutionality. All that is required of a valid
classification is that it be reasonable, which means
that the classification should be based on
substantial distinctions which make for real
differences, that it must be germane to the
purpose of the law; that it must not be limited to
existing conditions only; and that it must apply
equally to each member of the class. This Court has
held that the standard is satisfied if the
classification or distinction is based on a
reasonable foundation or rational basis and is not
palpably arbitrary.27 (Emphasis supplied)
There should be no dispute on the existence of
substantial distinctions between Filipinos in mixed
marriages and those who are married to fellow
Filipinos. In fact, several of these distinctions were
highlighted in the ponencia, thus:
A Filipino who is married to another Filipino is not
similarly situated with a Filipino who is married to a
foreign citizen. There are real, material and substantial
differences between them. Ergo, they should not be
treated alike, both as to rights conferred and liabilities
imposed. Without a doubt, there are political,
economic, cultural, and religious dissimilarities as well
as varying legal systems and procedures, all too
unfamiliar, that a Filipino national who is married to
an alien spouse has to contend with. More
importantly, while a divorce decree obtained
abroad by a Filipino against another Filipino is
null and void, a divorce decree obtained by an
alien against his or her Filipino spouse is
recognized if made in accordance with the national
law of the foreigner.28 (Emphasis supplied)
As observed by the ponencia, the most important
distinction between Filipinos in mixed marriages and
those who are married to fellow Filipinos is their
exposure to the absurdity for which Article 26(2) had
been precisely crafted, as only Filipinos in mixed
182
marriages may find themselves married without a
spouse due to the effects of a foreign divorce decree.
This distinction is "substantial" as to necessitate a
difference in treatment before the law.
To disregard these substantial distinctions for the sake
of liberality would empower Filipinos in mixed
marriages to obtain divorce decrees by invoking
foreign law at whim, and effectively sanction a legal
preference in their favor at the expense of those
Filipinos who happen to be married to their fellow
Filipinos. A liberal interpretation of Article 26(2)
would, in Dean Carale's words, "encourage Filipinos to
marry foreigners."29
To stress, all Filipinos are bound by the prohibition
against absolute divorce. The recognition afforded
to foreign divorce under Article 26(2) is extended
only as a means to recognize its residual effect on
Filipinos whose marital ties to their alien spouses
are severed by operation of the latter's national
laws. The provision was not intended to grant any
preferential right in favor of Filipinos in mixed
marriages, but intended merely to recognize the
operation of foreign divorce on foreigners whose
national laws permit divorce.
Equally apparent is the fundamental distinction
between foreigners and Filipinos under the second
classification, the former being subject to their
respective national laws and the latter being bound by
the laws of the Philippines regardless of their place of
residence. Clearly, foreigners and Filipinos are not
similarly situated. Hence, the determination of their
legal status, among others, cannot be made subject to
the same parameters. In any case, I emphasize, at the
sake of being repetitious, that such classification had
been created not by Article 26(2) of the Family Code,
but rather, the nationality principle under Article 15 of
the Civil Code:
ART. 15. Laws relating to family rights and duties, or
to the status, condition and legal capacity of persons
are binding upon citizens of the Philippines, even
though living abroad.
Finally, I find that Article 26(2) does not make any
discernable distinction between men and women, as
the exception therein may be invoked by both men
and women with equal force to attain the same end,
provided that the requirements for its application
obtain. While I am certainly aware that the respondent
in this case is one of the many Filipino women who
find themselves in unsuccessful marriages with
foreign nationals, I am equally aware that this
unfortunate circumstance is similarly faced by Filipino
men, who, like their female counterparts, are
precluded from obtaining an absolute divorce under
Philippine law.
Respondent's case falls outside of the scope of Article
26(2) of the Family Code.
In this case, it has been established that (i) the
respondent is a Filipino citizen who married a
Japanese national; (ii) it was the respondent who
subsequently obtained a divorce decree against
her Japanese husband from a Japanese court; and
(iii) the respondent thereafter filed a Petition for
Recognition and Enforcement of a Foreign
Judgment30 before the RTC.31 It is clear that
respondent is, and has always been, a Filipino citizen.
Pursuant to the nationality principle, respondent's
personal status is subject to Philippine law which, in
turn, prohibits absolute divorce.
Hence, the divorce decree which respondent obtained
under Japanese law cannot be given effect, as she is,
without dispute, a national not of Japan, but of the
Philippines. Nevertheless, the verba legisapplication of
Article 26(2) does not deprive the respondent of legal
remedies, as she may pray for the severance of her
marital ties before the RTC in accordance with the
mechanisms now existing under the Family Code.
The Constitution mandates the protection of the family
as a basic autonomous social institution.32 In this
connection, the Family Code characterizes marriage as
a special contract of permanent union, and regards
the family as "an inviolable social institution whose
nature, consequences, and incidents are governed by
law" and generally, not subject to stipulation.33 Upon
these fundamental principles rests the prohibition
against absolute divorce, which had remained effective
and unchanged since the enactment of the Civil Code
in 1950.34
Adherence to this prohibition is met with much
reservation, as it purportedly forces Filipinos to play
second-fiddle to their foreign spouses, and places said
Filipinos at a disadvantage. Moreover, it had been
argued in the deliberations of the Court that such
adherence sanctions various forms of abuse that
plague mixed marriages, and deprives Filipinos in such
marriages of a way out. I find that these observations,
pressing as they are, already delve into the wisdom of
statutes governing marriage and personal status with
which the Court cannot interfere.
To note, Article 26(2) of the Family Code has remained
unchanged since the issuance of EO 227. The blanket
recognition of absolute divorce overturns the Court's
unequivocal interpretation of the provision as laid
down in the cases of Pilapil, Iyoy, Orbecido, Dacasin,
Bayot, Fujiki and Medina, which span a period of nearly
three decades. Ascribing a contradictory
interpretation to the provision, under the guise of
equal protection, essentially re-writes Article 26(2)
and gives it a meaning completely different from the
framers' intention.
While I am not oblivious to the difficulty that results
from the prohibition on absolute divorce and
commiserate totally with the respondent in this
regard, I find that the prohibition remains, and thus,
must be faithfully applied. To my mind, a contrary
ruling will subvert not only the intention of the
framers of the law, but also that of the Filipino people,
as expressed in the Constitution. The Court is bound
to respect the prohibition, until the legislature
deems it lit to lift the same through the passage of
a statute permitting absolute divorce.
As recognized by the ponencia, there are currently four
bills on the subject of divorce and severance of
marriage pending before the 17th Congress: (i) House
Bill No. 116 (HB 116) and House Bill No. 2380 (HB
183
2380) which propose different grounds for the 3509 Phil. 108 (2005) [Per J. Quisumbing, First
issuance of a judicial decree of absolute divorce; (ii) Division].
House Bill No. 1062 (HB 1062) which proposes the
inclusion of separation in fact as an additional ground 4 625 Phil. 494 (2010) [Per J. Carpio, Second Division].
for annulment of marriage; and (iii) House Bill No.
6027 (HB 6027) which proposes additional grounds 5Minutes of the 146th joint Meeting of the Civil Code
for dissolution of marriage. These bills have been and Family Law Committees dated July 12, 1986, p. 5.
consolidated and substituted by House Bill No.
730335 (HB 7303), which, at present, is awaiting
deliberations before the Senate.36
6Minutes of the 149th Joint Meeting of the Civil Code
and Family Law Committees dated August 2, 1986, pp.
14-15.
HB 7303 proposes the issuance of divorce decrees on
the basis of the following grounds: 7 See CIVIL CODE, Arts. 15 and 17.
1. The existing grounds for legal separation and
annulment of marriage under Articles 55 and
8 Supra note 5.
45 of the Family Code;
2. Separation in fact for at least five years;
9 Supra note 2, at 361.
3. Psychological incapacity, whether or not
present at the time of the celebration of the 10 Id. at 362.
marriage;
4. Gender reassignment surgery or transition 11 Id.
from one sex to another undertaken by either
spouse; and 12 Supra note 3, at 115-116.
5. Irreconcilable marital differences.37
13Supra note 4, at 508; emphasis and underscoring
These movements towards the passage of a divorce supplied.
law illustrate that the difficulty which results from the
absolute prohibition against marriage is being 14See Medina v. Koike, 791 Phil. 645, 651-652 (2016)
addressed by the 17th Congress through a statute
[Per J. Perlas-Bernabe, First Division]; Garcia v. Recio,
specifically crafted for the purpose. That the
418 Phil. 723, 725 and 730-731 (2001) [Per J.
legislature has seen it necessary to initiate these
Panganiban, Third Division].
proposed laws is a clear delineation of the Court's
role — that is, to simply apply the current law and
not for it to indulge in judicial legislation.
15256 Phil. 407 (1989) [Per J. Regalado, Second
Division].
Indeed, it is desirable, if not imperative, that statutes
in a progressive democracy remain responsive to the
16507 Phil. 485 (2005) [Per J. Chico-Nazario, Second
realities of the present time. However, responsiveness Division].
is a matter of policy which requires a determination of
what the law ought to be, and not what the law 17591 Phil. 452 (2008) [Per J. Velasco, Jr., Second
actually is.38 Widening the scope of the exception Division].
found in Article 26(2) so as to indiscriminately
recognize foreign divorce in this jurisdiction is doing, 18 712 Phil. 524 (2013) [Per J. Carpio, Second Division].
in Justice Elias Finley Johnson's39 words, "exactly what
the Legislature itself [has] refused to do."40 It not 19 Supra note 14.
only subverts the standing public policy against
absolute divorce; worse, it sanctions a violation of the 20 Supra note 6.
fundamental principle of separation of powers — a
violation which cannot be undone by any subsequent
law. To wield judicial power in this manner is to
21 Supra note 16, at 503-504.
arrogate unto the Court a power which it does not
22Ponencia, p. 14.
possess; it is to forget that this State, is foremost
governed by the rule of law and not of men, however
wise such men are or purport to be. 23 Supra note 15, at 421.

Considering the foregoing, I submit that the Court of 24Ponencia, p. 14.

Appeals erred when it reversed the RTC's order
denying respondent's Petition for Enforcement. Hence,
I vote to GRANT the instant Petition for Review.
Endnotes:
1 See Tañada v. Yulo, 61 Phil. 515-516, 519 (1935) [Per
J. Malcolm, En Banc]; emphasis supplied.
2223 Phil. 357 (1985) [Per J. Melencio-Herrera, First
Division].
25See generally Department of Education, Culture and
Sports v. San Diego, 259 Phil. 1016 (1989) [Per J. Cruz,
En Banc].
26See Fariñas v. Executive Secretary, 463 Phil. 179,
206-208 (2003) [Per J. Callejo, Sr., En Banc].
27Central Bank Employees Association, Inc. v. Bangko
Sentral ng Pilipinas, 487 Phil. 531, 559-560 (2004)
[Per J. Puno, En Banc].

184
28Ponencia, p. 14.
29 Supra note 6, at 14.
30Formerly captioned as Petition for Cancellation of
Entry of Marriage; see ponencia, p. 2.
31Ponencia, p. 2.
32 CONSTITUTION, Art. II, Sec. 12.
33 FAMILY CODE, Title I, Art. 1.
34See generally Raymundo v. Peñas, 96 Phil. 311
(1954) [Per J. J.B.L. Reyes, En Banc].
35AN ACT INSTITUTING ABSOLUTE DIVORCE AND
DISSOLUTION OF MARRIAGE IN THE PHILIPPINES.
36HB 7303 passed its second reading on March 14,
2018, and was likewise approved on its third and final
reading before the lower house on March 19, 2018.
See "House passes divorce bill on second reading,"
< http://www.sunstar.com.ph/article/423557 > (last
accessed on March 19, 2018) and "House approves
divorce bill on 3rd reading,"
< https://www.rappler.com/nation/198516-divorce-
bill-philippines-passes-third-reading-house-
representatives > (last accessed on March 22, 2018).
37 See HB 7303, Sec. 5.
38 See generally People v. Vera, 65 Phil. 56 (1937) [Per
J. Laurel, En Banc].
39Justice Elias Finley Johnson served as Associate
Justice of the Supreme Court of the Philippines from
1903 to 1933.
40See Nicolas v. Alberto, 51 Phil. 370, 380 (1928)
[Dissenting Opinion, J. Johnson]
G.R. No. 140047. July 13, 2004]
PHILIPPINE EXPORT AND FOREIGN LOAN
GUARANTEE CORPORATION, petitioner,
vs. V.P. EUSEBIO CONSTRUCTION, INC.; 3-
PLEX INTERNATIONAL, INC.; VICENTE P.
EUSEBIO; SOLEDAD C. EUSEBIO; EDUARDO
E. SANTOS; ILUMINADA SANTOS; AND
FIRST INTEGRATED BONDING AND
INSURANCE COMPANY, INC., respondents.
DECISION
DAVIDE, JR., C.J.:
This case is an offshoot of a service contract
entered into by a Filipino construction firm with the
Iraqi Government for the construction of the Institute
of Physical Therapy-Medical Center, Phase II,
in Baghdad, Iraq, at a time when the Iran-Iraq war was
ongoing.
In a complaint filed with the Regional Trial Court
of Makati City, docketed as Civil Case No. 91-1906 and
assigned to Branch 58, petitioner Philippine Export
and Foreign Loan Guarantee
Corporation[1] (hereinafter Philguarantee) sought
reimbursement from the respondents of the sum of
money it paid to Al Ahli Bank of Kuwait pursuant to a
guarantee it issued for respondent V.P. Eusebio
Construction, Inc. (VPECI).
The factual and procedural antecedents in this
case are as follows:
On 8 November 1980, the State Organization of
Buildings (SOB), Ministry of Housing and Construction,
Baghdad, Iraq, awarded the construction of the
Institute of Physical TherapyMedical Rehabilitation
Center, Phase II, in Baghdad, Iraq, (hereinafter the
Project) to Ajyal Trading and Contracting Company
(hereinafter Ajyal), a firm duly licensed with the
Kuwait Chamber of Commerce for a total contract
price of ID5,416,089/046 (or about US$18,739,668).[2]
On 7 March 1981, respondent spouses Eduardo
and Iluminada Santos, in behalf of respondent 3-Plex
International, Inc. (hereinafter 3-Plex), a local
contractor engaged in construction business, entered
into a joint venture agreement with Ajyal wherein the
former undertook the execution of the entire Project,
while the latter would be entitled to a commission of
4% of the contract price.[3] Later, or on 8 April 1981,
respondent 3-Plex, not being accredited by or
registered with the Philippine Overseas Construction
Board (POCB), assigned and transferred all its rights
and interests under the joint venture agreement to
VPECI, a construction and engineering firm duly
registered with the POCB.[4]However, on 2 May 1981,
3-Plex and VPECI entered into an agreement that the
execution of the Project would be under their joint
management.[5]
The SOB required the contractors to submit (1) a
performance bond of ID271,808/610 representing 5%
of the total contract price and (2) an advance payment
bond of ID541,608/901 representing 10% of the
advance payment to be released upon signing of the
contract.[6] To comply with these requirements,
respondents 3-Plex and VPECI applied for the issuance
of a guarantee with petitioner Philguarantee, a
government financial institution empowered to issue
guarantees for qualified Filipino contractors to secure
the performance of approved service contracts
abroad.[7]
Petitioner Philguarantee approved respondents
application. Subsequently, letters of guarantee[8] were
issued by Philguarantee to the Rafidain Bank
of Baghdad covering 100% of the performance and
advance payment bonds, but they were not accepted
by SOB. What SOB required was a letter-guarantee
from Rafidain Bank, the government bank
of Iraq. Rafidain Bank then issued a performance bond
in favor of SOB on the condition that another foreign
bank, not Philguarantee, would issue a counter-
guarantee to cover its exposure. Al Ahli Bank
of Kuwait was, therefore, engaged to provide a
counter-guarantee to Rafidain Bank, but it required a
similar counter-guarantee in its favor from the
185
petitioner. Thus, three layers of guarantees had to be
arranged.[9]
Upon the application of respondents 3-Plex and
VPECI, petitioner Philguarantee issued in favor of Al
Ahli Bank of Kuwait Letter of Guarantee No. 81-194-
F [10] (Performance Bond Guarantee) in the amount of
ID271,808/610 and Letter of Guarantee No. 81-195-
F[11] (Advance Payment Guarantee) in the amount
of ID541,608/901, both for a term of eighteen months
from 25 May 1981. These letters of guarantee were
secured by (1) a Deed of Undertaking[12]executed by
respondents VPECI, Spouses Vicente P. Eusebio and
Soledad C. Eusebio, 3-Plex, and Spouses Eduardo E.
Santos and Iluminada Santos; and (2) a surety
bond[13] issued by respondent First Integrated
Bonding and Insurance Company, Inc. (FIBICI). The
Surety Bond was later amended on 23 June 1981 to
increase the amount of coverage from P6.4 million
to P6.967 million and to change the bank in whose
favor the petitioners guarantee was issued, from
Rafidain Bank to Al Ahli Bank of Kuwait.[14]
On 11 June 1981, SOB and the joint venture
VPECI and Ajyal executed the service contract[15] for
the construction of the Institute of Physical
TherapyMedical Rehabilitation Center, Phase II,
in Baghdad, Iraq, wherein the joint venture contractor
undertook to complete the Project within a period of
547 days or 18 months. Under the Contract, the Joint
Venture would supply manpower and materials, and
SOB would refund to the former 25% of the project
cost in Iraqi Dinar and the 75% in US dollars at the
exchange rate of 1 Dinar to 3.37777 US Dollars.[16]
The construction, which was supposed to start
on 2 June 1981, commenced only on the last week of
August 1981. Because of this delay and the slow
progress of the construction work due to some
setbacks and difficulties, the Project was not
completed on 15 November 1982 as scheduled.But in
October 1982, upon foreseeing the impossibility of
meeting the deadline and upon the request of Al Ahli
Bank, the joint venture contractor worked for the
renewal or extension of the Performance Bond and
Advance Payment Guarantee. Petitioners Letters of
Guarantee Nos. 81-194-F (Performance Bond) and 81-
195-F (Advance Payment Bond) with expiry date of 25
November 1982were then renewed or extended to 9
February 1983 and 9 March 1983, respectively.[17] The
surety bond was also extended for another period of
one year, from 12 May 1982 to 12 May 1983.[18] The
Performance Bond was further extended twelve times
with validity of up to 8 December 1986,[19] while the
Advance Payment Guarantee was extended three
times more up to 24 May 1984 when the latter was
cancelled after full refund or reimbursement by the
joint venture contractor.[20] The surety bond was
likewise extended to 8 May 1987.[21]
As of March 1986, the status of the Project was
51% accomplished, meaning the structures were
already finished. The remaining 47% consisted in
electro-mechanical works and the 2%, sanitary works,
which both required importation of equipment and
materials.[22]
On 26 October 1986, Al Ahli Bank of Kuwait sent
a telex call to the petitioner demanding full payment of
its performance bond counter-guarantee.
Upon receiving a copy of that telex message on 27
October 1986, respondent VPECI requested Iraq Trade
and Economic Development Minister Mohammad
Fadhi Hussein to recall the telex call on the
performance guarantee for being a drastic action in
contravention of its mutual agreement with the latter
that (1) the imposition of penalty would be held in
abeyance until the completion of the project; and (2)
the time extension would be open, depending on the
developments on the negotiations for a foreign loan to
finance the completion of the project.[23] It also wrote
SOB protesting the call for lack of factual or legal basis,
since the failure to complete the Project was due to (1)
the Iraqi governments lack of foreign exchange with
which to pay its (VPECIs) accomplishments and (2)
SOBs noncompliance for the past several years with
the provision in the contract that 75% of the billings
would be paid in US dollars.[24] Subsequently, or on 19
November 1986, respondent VPECI advised the
petitioner not to pay yet Al Ahli Bank because efforts
were being exerted for the amicable settlement of the
Project.[25]
On 14 April 1987, the petitioner received another
telex message from Al Ahli Bank stating that it had
already paid to Rafidain Bank the sum of US$876,564
under its letter of guarantee, and demanding
reimbursement by the petitioner of what it paid to the
latter bank plus interest thereon and related
expenses.[26]
Both petitioner Philguarantee and respondent
VPECI sought the assistance of some government
agencies of the Philippines. On 10 August 1987, VPECI
requested the Central Bank to hold in abeyance the
payment by the petitioner to allow the diplomatic
machinery to take its course, for otherwise, the
Philippine government , through the Philguarantee
and the Central Bank, would become instruments of
the Iraqi Government in consummating a clear act of
injustice and inequity committed against a Filipino
contractor.[27]
On 27 August 1987, the Central Bank authorized
the remittance for its account of the amount of
US$876,564 (equivalent to ID271, 808/610) to Al Ahli
Bank representing full payment of the performance
counter-guarantee for VPECIs project in Iraq. [28]
On 6 November 1987, Philguarantee informed
VPECI that it would remit US$876,564 to Al Ahli Bank,
and reiterated the joint and solidary obligation of the
respondents to reimburse the petitioner for the
advances made on its counter-guarantee.[29]
The petitioner thus paid the amount of
US$876,564 to Al Ahli Bank of Kuwait on 21 January
1988.[30] Then, on 6 May 1988, the petitioner paid to Al
Ahli Bank of Kuwait US$59,129.83 representing
interest and penalty charges demanded by the latter
bank.[31]
On 19 June 1991, the petitioner sent to the
respondents separate letters demanding full payment
of the amount of P47,872,373.98 plus accruing
interest, penalty charges, and 10% attorneys fees
pursuant to their joint and solidary obligations under
the deed of undertaking and surety bond.[32] When the
respondents failed to pay, the petitioner filed on 9 July
1991 a civil case for collection of a sum of money
against the respondents before the RTC of Makati City.
186
 After due trial, the trial court ruled against
Philguarantee and held that the latter had no valid
cause of action against the respondents. It opined that
at the time the call was made on the guarantee which
was executed for a specific period, the guarantee had
already lapsed or expired. There was no valid renewal
or extension of the guarantee for failure of the
petitioner to secure respondents express consent
thereto. The trial court also found that the joint
venture contractor incurred no delay in the execution
of the Project. Considering the Project owners
violations of the contract which rendered impossible
the joint venture contractors performance of its
undertaking, no valid call on the guarantee could be
made. Furthermore, the trial court held that no valid
notice was first made by the Project owner SOB to the
joint venture contractor before the call on the
guarantee. Accordingly, it dismissed the complaint, as
well as the counterclaims and cross-claim, and
ordered the petitioner to pay attorneys fees
of P100,000 to respondents VPECI and Eusebio
Spouses and P100,000 to 3-Plex and the Santos
Spouses, plus costs. [33]
In its 14 June 1999 Decision,[34] the Court of
Appeals affirmed the trial courts decision,
ratiocinating as follows:
First, appellant cannot deny the fact that it was fully
aware of the status of project implementation as well
as the problems besetting the contractors, between
1982 to 1985, having sent some of its people
to Baghdad during that period. The successive
renewals/extensions of the guarantees in fact, was
prompted by delays, not solely attributable to the
contractors, and such extension understandably
allowed by the SOB (project owner) which had not
anyway complied with its contractual commitment to
tender 75% of payment in US Dollars, and which still
retained overdue amounts collectible by VPECI.
Second, appellant was very much aware of the
violations committed by the SOB of its contractual
undertakings with VPECI, principally, the payment of
foreign currency (US$) for 75% of the total contract
price, as well as of the complications and injustice that
will result from its payment of the full amount of the
performance guarantee, as evident in
PHILGUARANTEEs letter dated 13 May 1987 .
Third, appellant was fully aware that SOB was in fact
still obligated to the Joint Venture and there was still
an amount collectible from and still being retained by
the project owner, which amount can be set-off with
the sum covered by the performance guarantee.
Fourth, well-apprised of the above conditions
obtaining at the Project site and cognizant of the war
situation at the time in Iraq, appellant, though earlier
has made representations with the SOB regarding a
possible amicable termination of the Project as
suggested by VPECI, made a complete turn-around and
insisted on acting in favor of the unjustified call by the
foreign banks.[35]
The petitioner then came to this Court via Rule
45 of the Rules of Court claiming that the Court of
Appeals erred in affirming the trial courts ruling that
I
RESPONDENTS ARE NOT LIABLE UNDER THE DEED
OF UNDERTAKING THEY EXECUTED IN FAVOR OF
PETITIONER IN CONSIDERATION FOR THE ISSUANCE
OF ITS COUNTER-GUARANTEE AND THAT
PETITIONER CANNOT PASS ON TO RESPONDENTS
WHAT IT HAD PAID UNDER THE SAID COUNTER-
GUARANTEE.
II
PETITIONER CANNOT CLAIM SUBROGATION.
III
IT IS INIQUITOUS AND UNJUST FOR PETITIONER TO
HOLD RESPONDENTS LIABLE UNDER THEIR DEED OF
UNDERTAKING.[36]
The main issue in this case is whether the
petitioner is entitled to reimbursement of what it paid
under Letter of Guarantee No. 81-194-F it issued to Al
Ahli Bank of Kuwait based on the deed of undertaking
and surety bond from the respondents.
The petitioner asserts that since the guarantee it
issued was absolute, unconditional, and irrevocable
the nature and extent of its liability are analogous to
those of suretyship. Its liability accrued upon the
failure of the respondents to finish the construction of
the Institute of Physical Therapy Buildings in Baghdad.
By guaranty a person, called the guarantor, binds
himself to the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal
debtor, the contract is called suretyship. [37]
Strictly speaking, guaranty and surety are nearly
related, and many of the principles are common to
both. In both contracts, there is a promise to answer
for the debt or default of another. However, in this
jurisdiction, they may be distinguished thus:
1. A surety is usually bound with his
principal by the same instrument
executed at the same time and on the
same consideration. On the other hand,
the contract of guaranty is the
guarantor's own separate undertaking
often supported by a consideration
separate from that supporting the
contract of the principal; the original
contract of his principal is not his
contract.
2. A surety assumes liability as a regular
party to the undertaking; while the
liability of a guarantor is conditional
depending on the failure of the primary
debtor to pay the obligation.
3. The obligation of a surety is primary,
while that of a guarantor is secondary.
4. A surety is an original promissor and
debtor from the beginning, while a
guarantor is charged on his own
undertaking.
5. A surety is, ordinarily, held to know every
default of his principal; whereas a
187
 guarantor is not bound to take notice of
the non-performance of his principal.
6. Usually, a surety will not be discharged
either by the mere indulgence of the
creditor to the principal or by want of
notice of the default of the principal, no
matter how much he may be injured
thereby. A guarantor is often discharged
by the mere indulgence of the creditor to
the principal, and is usually not liable
unless notified of the default of the
principal. [38]
In determining petitioners status, it is necessary
to read Letter of Guarantee No. 81-194-F, which
provides in part as follows:
In consideration of your issuing the above
performance guarantee/counter-guarantee, we hereby
unconditionally and irrevocably guarantee, under our
Ref. No. LG-81-194 F to pay you on your first written
or telex demand Iraq Dinars Two Hundred Seventy
One Thousand Eight Hundred Eight and fils six
hundred ten (ID271,808/610) representing 100% of
the performance bond required of V.P. EUSEBIO for
the construction of the Physical Therapy Institute,
Phase II, Baghdad, Iraq, plus interest and other
incidental expenses related thereto.
In the event of default by V.P. EUSEBIO, we shall
pay you 100% of the obligation unpaid but in no
case shall such amount exceed Iraq Dinars (ID)
271,808/610 plus interest and other incidental
expenses. (Emphasis supplied)[39]
Guided by the abovementioned distinctions
between a surety and a guaranty, as well as the factual
milieu of this case, we find that the Court of Appeals
and the trial court were correct in ruling that the
petitioner is a guarantor and not a surety. That the
guarantee issued by the petitioner is unconditional
and irrevocable does not make the petitioner a surety.
As a guaranty, it is still characterized by its subsidiary
and conditional quality because it does not take effect
until the fulfillment of the condition, namely, that the
principal obligor should fail in his obligation at the
time and in the form he bound himself.[40] In other
words, an unconditional guarantee is still subject to
the condition that the principal debtor should default
in his obligation first before resort to the guarantor
could be had. A conditional guaranty, as opposed to an
unconditional guaranty, is one which depends upon
some extraneous event, beyond the mere default of the
principal, and generally upon notice of the principals
default and reasonable diligence in exhausting proper
remedies against the principal.[41]
It appearing that Letter of Guarantee No. 81-194-
F merely stated that in the event of default by
respondent VPECI the petitioner shall pay, the
obligation assumed by the petitioner was simply that
of an unconditional guaranty, not conditional
guaranty. But as earlier ruled the fact that petitioners
guaranty is unconditional does not make it a
surety. Besides, surety is never presumed. A party
should not be considered a surety where the contract
itself stipulates that he is acting only as a guarantor. It
is only when the guarantor binds himself solidarily
with the principal debtor that the contract becomes
one of suretyship.[42]
Having determined petitioners liability as
guarantor, the next question we have to grapple with
is whether the respondent contractor has defaulted in
its obligations that would justify resort to the
guaranty. This is a mixed question of fact and law that
is better addressed by the lower courts, since this
Court is not a trier of facts.
It is a fundamental and settled rule that the
findings of fact of the trial court and the Court of
Appeals are binding or conclusive upon this Court
unless they are not supported by the evidence or
unless strong and cogent reasons dictate
otherwise.[43] The factual findings of the Court of
Appeals are normally not reviewable by us under Rule
45 of the Rules of Court except when they are at
variance with those of the trial court. [44] The trial
court and the Court of Appeals were in unison that the
respondent contractor cannot be considered to have
defaulted in its obligations because the cause of the
delay was not primarily attributable to it.
A corollary issue is what law should be applied in
determining whether the respondent contractor
has defaulted in the performance of its obligations
under the service contract. The question of whether
there is a breach of an agreement, which
includes default or mora,[45] pertains to the essential
or intrinsic validity of a contract. [46]
No conflicts rule on essential validity of contracts
is expressly provided for in our laws. The rule
followed by most legal systems, however, is that the
intrinsic validity of a contract must be governed by
the lex contractus or proper law of the contract. This is
the law voluntarily agreed upon by the parties (the lex
loci voluntatis) or the law intended by them either
expressly or implicitly (the lex loci intentionis). The
law selected may be implied from such factors as
substantial connection with the transaction, or the
nationality or domicile of the parties.[47]Philippine
courts would do well to adopt the first and most basic
rule in most legal systems, namely, to allow the parties
to select the law applicable to their contract, subject to
the limitation that it is not against the law, morals, or
public policy of the forum and that the chosen law must
bear a substantive relationship to the transaction. [48]
It must be noted that the service contract
between SOB and VPECI contains no express choice of
the law that would govern it. In the United
Statesand Europe, the two rules that now seem to have
emerged as kings of the hill are (1) the parties may
choose the governing law; and (2) in the absence of
such a choice, the applicable law is that of the State
that has the most significant relationship to the
transaction and the parties.[49] Another authority
proposed that all matters relating to the time, place,
and manner of performance and valid excuses for non-
performance are determined by the law of the place of
performance or lex loci solutionis, which is useful
because it is undoubtedly always connected to the
contract in a significant way.[50]
In this case, the laws of Iraq bear substantial
connection to the transaction, since one of the parties
is the Iraqi Government and the place of performance
is in Iraq. Hence, the issue of whether respondent
VPECI defaulted in its obligations may be determined
by the laws of Iraq. However, since that foreign law
was not properly pleaded or proved, the presumption
of identity or similarity, otherwise known as
188
the processual presumption, comes into play. Where
foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that foreign law is the
same as ours.[51]
Our law, specifically Article 1169, last paragraph,
of the Civil Code, provides: In reciprocal obligations,
neither party incurs in delay if the other party does
not comply or is not ready to comply in a proper
manner with what is incumbent upon him.
Default or mora on the part of the debtor is the
delay in the fulfillment of the prestation by reason of a
cause imputable to the former. [52] It is the non-
fulfillment of an obligation with respect to time.[53]
It is undisputed that only 51.7% of the total work
had been accomplished.The 48.3% unfinished portion
consisted in the purchase and installation of electro-
mechanical equipment and materials, which were
available from foreign suppliers, thus requiring US
Dollars for their importation. The monthly billings and
payments made by SOB[54] reveal that the agreement
between the parties was a periodic payment by the
Project owner to the contractor depending on the
percentage of accomplishment within the
period. [55] The payments were, in turn, to be used by
the contractor to finance the subsequent phase of the
work. [56] However, as explained by VPECI in its letter
to the Department of Foreign Affairs (DFA), the
payment by SOB purely in Dinars adversely affected
the completion of the project; thus:
4. Despite protests from the plaintiff, SOB continued
paying the accomplishment billings of the Contractor
purely in Iraqi Dinars and which payment came only
after some delays.
5. SOB is fully aware of the following:
5.2 That Plaintiff is a foreign contractor in Iraq and as
such, would need foreign currency (US$), to finance
the purchase of various equipment, materials,
supplies, tools and to pay for the cost of project
management, supervision and skilled labor not
available in Iraq and therefore have to be imported
and or obtained from the Philippines and other
sources outside Iraq.
5.3 That the Ministry of Labor and Employment of
the Philippines requires the remittance into
the Philippines of 70% of the salaries of Filipino
workers working abroad in US Dollars;
5.5 That the Iraqi Dinar is not a freely convertible
currency such that the same cannot be used to
purchase equipment, materials, supplies, etc. outside
of Iraq;
5.6 That most of the materials specified by SOB in the
CONTRACT are not available in Iraq and therefore
have to be imported;
5.7 That the government of Iraq prohibits the bringing
of local currency (Iraqui Dinars) out of Iraq and hence,
imported materials, equipment, etc., cannot be
purchased or obtained using Iraqui Dinars as medium
of acquisition.
8. Following the approved construction program of the
CONTRACT, upon completion of the civil works
portion of the installation of equipment for the
building, should immediately follow, however, the
CONTRACT specified that these equipment which are
to be installed and to form part of the PROJECT have to
be procured outside Iraq since these are not being
locally manufactured. Copy f the relevant portion of
the Technical Specification is hereto attached as Annex
C and made an integral part hereof;
10. Due to the lack of Foreign currency in Iraq for this
purpose, and if only to assist the Iraqi government in
completing the PROJECT, the Contractor without any
obligation on its part to do so but with the knowledge
and consent of SOB and the Ministry of Housing &
Construction of Iraq, offered to arrange on behalf of
SOB, a foreign currency loan, through the facilities of
Circle International S.A., the Contractors Sub-
contractor and SACE MEDIO CREDITO which will act
as the guarantor for this foreign currency loan.
Arrangements were first made with Banco di Roma.
Negotiation started in June 1985. SOB is informed of
the developments of this negotiation, attached is a
copy of the draft of the loan Agreement between SOB
as the Borrower and Agent. The Several Banks, as
Lender, and counter-guaranteed by Istituto Centrale
Per II Credito A Medio Termine (Mediocredito)
Sezione Speciale Per LAssicurazione Del Credito
AllExportazione (Sace). Negotiations went on and
continued until it suddenly collapsed due to the
reported default by Iraq in the payment of its
obligations with Italian government, copy of the news
clipping dated June 18, 1986 is hereto attached as
Annex D to form an integral part hereof;
15. On September 15, 1986, Contractor received
information from Circle International S.A. that because
of the news report that Iraq defaulted in its obligations
with European banks, the approval by Banco di Roma
of the loan to SOB shall be deferred indefinitely, a copy
of the letter of Circle International together with the
news clippings are hereto attached as Annexes F and
F-1, respectively.[57]
As found by both the Court of Appeals and the
trial court, the delay or the non-completion of the
Project was caused by factors not imputable to the
respondent contractor. It was rather due mainly to the
persistent violations by SOB of the terms and
conditions of the contract, particularly its failure to
pay 75% of the accomplished work in US
Dollars. Indeed, where one of the parties to a contract
does not perform in a proper manner the prestation
which he is bound to perform under the contract, he is
not entitled to demand the performance of the other
party. A party does not incur in delay if the other party
fails to perform the obligation incumbent upon him.
The petitioner, however, maintains that the
payments by SOB of the monthly billings in purely
Iraqi Dinars did not render impossible the
performance of the Project by VPECI. Such posture is
quite contrary to its previous representations. In his
26 March 1987 letter to the Office of the Middle
Eastern and African Affairs (OMEAA), DFA, Manila,
petitioners Executive Vice-President Jesus M. Taedo
stated that while VPECI had taken every possible
measure to complete the Project, the war situation in
189
Iraq, particularly the lack of foreign exchange, was
proving to be a great obstacle; thus:
VPECI has taken every possible measure for the
completion of the project but the war situation
in Iraq particularly the lack of foreign exchange is
proving to be a great obstacle. Our performance
counterguarantee was called last 26 October
1986 when the negotiations for a foreign currency
loan with the Italian government through Banco de
Roma bogged down following news report
that Iraq has defaulted in its obligation with major
European banks. Unless the situation in Iraq is
improved as to allay the banks apprehension, there is
no assurance that the project will ever be
completed. [58]
In order that the debtor may be in default it is
necessary that the following requisites be present: (1)
that the obligation be demandable and already
liquidated; (2) that the debtor delays performance;
and (3) that the creditor requires the performance
because it must appear that the tolerance or
benevolence of the creditor must have ended. [59]
As stated earlier, SOB cannot yet demand
complete performance from VPECI because it has not
yet itself performed its obligation in a proper manner,
particularly the payment of the 75% of the cost of the
Project in US Dollars. The VPECI cannot yet be said to
have incurred in delay. Even assuming that there was
delay and that the delay was attributable to VPECI, still
the effects of that delay ceased upon the renunciation
by the creditor, SOB, which could be implied when the
latter granted several extensions of time to the
former. [60]Besides, no demand has yet been made by
SOB against the respondent contractor. Demand is
generally necessary even if a period has been fixed in
the obligation. And default generally begins from the
moment the creditor demands judicially or extra-
judicially the performance of the obligation. Without
such demand, the effects of default will not arise.[61]
Moreover, the petitioner as a guarantor is
entitled to the benefit of excussion, that is, it cannot be
compelled to pay the creditor SOB unless the property
of the debtor VPECI has been exhausted and all legal
remedies against the said debtor have been resorted
to by the creditor.[62] It could also set up compensation
as regards what the creditor SOB may owe the
principal debtor VPECI.[63] In this case, however, the
petitioner has clearly waived these rights and
remedies by making the payment of an obligation that
was yet to be shown to be rightfully due the creditor
and demandable of the principal debtor.
As found by the Court of Appeals, the petitioner
fully knew that the joint venture contractor had
collectibles from SOB which could be set off with the
amount covered by the performance guarantee. In
February 1987, the OMEAA transmitted to the
petitioner a copy of a telex dated 10 February 1987 of
the Philippine Ambassador in Baghdad, Iraq,
informing it of the note verbale sent by the Iraqi
Ministry of Foreign Affairs stating that the past due
obligations of the joint venture contractor from the
petitioner would be deducted from the dues of the two
contractors.[64]
Also, in the project situationer attached to the
letter to the OMEAA dated 26 March 1987, the
petitioner raised as among the arguments to be
presented in support of the cancellation of the
counter-guarantee the fact that the amount of
ID281,414/066 retained by SOB from the Project was
more than enough to cover the counter-guarantee of
ID271,808/610; thus:
6.1 Present the following arguments in cancelling the
counterguarantee:
The Iraqi Government does not
have the foreign exchange to fulfill
its contractual obligations of paying
75% of progress billings in US
dollars.
It could also be argued that the
amount of ID281,414/066 retained
by SOB from the proposed project is
more than the amount of the
outstanding counterguarantee.[65]
In a nutshell, since the petitioner was aware of
the contractors outstanding receivables from SOB, it
should have set up compensation as was proposed in
its project situationer.
Moreover, the petitioner was very much aware of
the predicament of the respondents. In fact, in its 13
May 1987 letter to the OMEAA, DFA, Manila, it stated:
VPECI also maintains that the delay in the completion
of the project was mainly due to SOBs violation of
contract terms and as such, call on the guarantee has
no basis.
While PHILGUARANTEE is prepared to honor its
commitment under the guarantee, PHILGUARANTEE
does not want to be an instrument in any case of
inequity committed against a Filipino contractor. It is
for this reason that we are constrained to seek your
assistance not only in ascertaining the veracity of Al
Ahli Banks claim that it has paid Rafidain Bank but
possibly averting such an event. As any payment
effected by the banks will complicate matters, we
cannot help underscore the urgency of VPECIs bid for
government intervention for the amicable termination
of the contract and release of the performance
guarantee. [66]
But surprisingly, though fully cognizant of SOBs
violations of the service contract and VPECIs
outstanding receivables from SOB, as well as the
situation obtaining in the Project site compounded by
the Iran-Iraq war, the petitioner opted to pay the
second layer guarantor not only the full amount of the
performance bond counter-guarantee but also
interests and penalty charges.
This brings us to the next question: May the
petitioner as a guarantor secure reimbursement from
the respondents for what it has paid under Letter of
Guarantee No. 81-194-F?
As a rule, a guarantor who pays for a debtor
should be indemnified by the latter[67] and would be
legally subrogated to the rights which the creditor has
against the debtor.[68] However, a person who makes
payment without the knowledge or against the will of
the debtor has the right to recover only insofar as the
190
payment has been beneficial to the debtor.[69] If the [5] Exh. 9-A, OR III, 416.
obligation was subject to defenses on the part of the
debtor, the same defenses which could have been set
[6] Exh. 12-G, OR III, 435.
up against the creditor can be set up against the [7] Exh. V, OR III, 395.
paying guarantor.[70]
[8] Exh. 13-V, OR III, 447.
From the findings of the Court of Appeals and the
trial court, it is clear that the payment made by the [9] CA Decision, 3.
petitioner guarantor did not in any way benefit the [10] Exh. A, OR III, 49.
principal debtor, given the project status and the
conditions obtaining at the Project site at that [11] Exh. B, OR III, 64.
time. Moreover, the respondent contractor was found
to have valid defenses against SOB, which are fully
[12] Exh. 11, OR III, 421.
supported by evidence and which have been [13] Exh. 12, OR III, 81.
meritoriously set up against the paying guarantor, the
petitioner in this case. And even if the deed of [14] Exh. E-1, OR III, 83.
undertaking and the surety bond secured petitioners [15] Exh. 1, OR III, 276.
guaranty, the petitioner is precluded from enforcing
the same by reason of the petitioners undue payment [16] Exh. 1-J, OR III, 282.
on the guaranty. Rights under the deed of undertaking
and the surety bond do not arise because these
[17] Exh. A-1, OR III, 51.
contracts depend on the validity of the enforcement of [18] Exh. E-2, OR III, 84.
the guaranty.
[19] Exhs. A-2 to A-13, OR III, 51-63.
The petitioner guarantor should have waited for
the natural course of guaranty: the debtor VPECI [20] Exhs. B-2 to B-4, OR III, 67-69.
should have, in the first place, defaulted in its
obligation and that the creditor SOB should have first
[21] Exhs. E to E-12, OR III, 84.
made a demand from the principal debtor. It is only [22] TSN, 10 April 1992, 41-44.
when the debtor does not or cannot pay, in whole or in
part, that the guarantor should pay.[71] When the [23] Exh. 22, OR III, 344-345.
petitioner guarantor in this case paid against the will [24] Exh.40, OR III, 366.
of the debtor VPECI, the debtor VPECI may set up
against it defenses available against the creditor SOB [25] Exh. 16, OR III, 220.
at the time of payment. This is the hard lesson that the
petitioner must learn.
[26] Exh. G-12-a, OR III, 207.

As the government arm in pursuing its objective

[27] Exh. 7-A, OR III, 306.
of providing the necessary support and assistance in [28] Exh. G-12-g, OR III, 213.
order to enable [Filipino exporters and contractors to
operate viably under the prevailing economic and [29] Exh. I, OR III, 230.
business conditions,[72] the petitioner should have [30] Exh.G-12-h, OR III, 214.
exercised prudence and caution under the
circumstances. As aptly put by the Court of Appeals, it [31] Exhs. G-13-d to G-13-f, OR III, 220-222; Exh.G-12-h,
would be the height of inequity to allow the petitioner OR III, 214.
to pass on its losses to the Filipino contractor VPECI
which had sternly warned against paying the Al Ahli
[32] Exhs. Q to T, OR III, 254-263.
Bank and constantly apprised it of the developments [33] Per Judge Zosimo Z. Angeles. Rollo, 72-79.
in the Project implementation.
[34] Per Associate Justice Martin S. Villarama, Jr. with
WHEREFORE, the petition for review Associate Justices Angelina Sandoval-
on certiorari is hereby DENIED for lack of merit, and Gutierrez (now Supreme Court Associate
the decision of the Court of appeals in CA-G.R. CV No. Justice) and Romeo A. Brawner
39302 is AFFIRMED. concurring.Rollo, 48-71.
No pronouncement as to costs. [35] Rollo, 61-68.
SO ORDERED. [36] Id., 293-294.
Panganiban, Ynares-Santiago, Carpio, and Azcuna, [37] Article 2047, Civil Code.
JJ., concur.
[38] E. Zobel Inc. v. CA, G.R. No. 113931, 6 May 1998,
290 SCRA 1; VI AMBROSIO PADILLA, CIVIL
LAW 497-498 (5th ed.
1969)(hereinafter PADILLA) .
[1] Now known as the Trade Investment Development
Corporation of the Philippines. [39] Exh. A, OR III, 49-50.
[2] Exhibit V and 2-3, Original Record, vol. III [40] VI PADILLA 494.
(hereinafter OR III), 395. [41] Blacks Law Dictionary 635 (5th ed. 1979).
[3] Exh. 12-E, OR III, 433. [42] Art. 2047, Civil Code.
[4] Exh. 12-E, OR III, 433.

191
[43] Alba v. Court of Appeals, G.R. No. 120066, 9 LTD.,
September 1999, 314 SCRA 36.
Petitioner,
[44] Development Bank of the Philippines v. Court of
Appeals, G.R. No. 119712, 29 January 1999, Present:
302 SCRA 362.
[45] DISEDERIO P. JURADO, COMMENTS AND - versus - QUISUMBING, J., Chairperson,
JURISPRUDENCE ON OBLIGATIONS AND
CONTRACTS 49 (7TH Revised ed. 1980) CARPIO,
(hereinafter JURADO ).
CARPIO MORALES,
[46] JOVITO R. SALONGA, PRIVATE INTERNATIONAL
LAW 350 (1995 ed.) (hereinafterSALONGA). HON. ALBERTO A. LERMA, in TINGA, and
[47] EDGARDO L. PARAS, PHILIPPINE CONFLICT OF
his capacity as Presiding Judge of VELASCO, JR., JJ.
LAWS 414 (6th ed. 1984).
[48] SALONGA, 356. Branch 256 of Regional Trial
[49] Id., 355. Court of Muntinlupa City, and
[50] JORGE R. COQUIA & ELIZABETH A.
PANGALANGAN, CONFLICT OF LAWS 418 PACIFIC GENERAL STEEL Promulgated:
(1995 ed.).
MANUFACTURING
[51] Lim v. Collector of Customs, 36 Phil. 472 (1917);
International Harvester Co. v. Hamburg- CORPORATION,
American Line, 42 Phil. 845; Miciano v. Brimo,
50 Phil. 867 (1924). Respondents. January 7, 2008
[52] IV ARTURO M. TOLENTINO, COMMENTARIES AND
x---------------------------------------------------------------------
JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES 101 (hereinafter TOLENTINO). --------------------x

[53] JURADO, 50.

[54] Exhs. 16 to 16-O,OR III, 454-469.
DECISION
[55] See Court of Appeals Decision, 19, Rollo, 66; RTCs
Decision, 22, Rollo, 93.
[56] RTCs Decision, 22; Rollo, 93.
[57] Exhs. 4-A to 4-D, OR III, 296-298.
VELASCO, JR., J.:
[58] Exh. 25, OR III, 352.
[59] IV TOLENTINO 110.
[60] Id.,102.
In our jurisdiction, the policy is to favor alternative
[61] Id.,110.
methods of resolving disputes, particularly in civil and
[62] Art. 2058, Civil Code.
commercial disputes. Arbitration along with
[63] Art.1280, Civil Code.
mediation, conciliation, and negotiation, being
[64] Exh. 23, OR III, 348-349.
inexpensive, speedy and less hostile methods have
[65] Exh. 25-E, OR III, 355.
long been favored by this Court. The petition before us
[66] Exh. 5, OR III, 303-304.
puts at issue an arbitration clause in a contract
[67] Art. 2066, Civil Code.
mutually agreed upon by the parties stipulating that
[68] Arts. 1302(3) and 2067, Civil Code.
they would submit themselves to arbitration in a
[69] Art. 1236, second par., Civil Code. foreign country. Regrettably, instead of hastening the
[70] VI PADILLA, 545. resolution of their dispute, the parties wittingly or
[71] V TOLENTINO, 521. unwittingly prolonged the controversy.
[72] 4th Whereas Clause of Executive Order No. 185,
which took effect on 5 June 1987.

Petitioner Korea Technologies Co., Ltd.

KOREA TECHNOLOGIES CO., G.R. No. 143581 (KOGIES) is a Korean corporation which is engaged in
the supply and installation of Liquefied Petroleum Gas

192
(LPG) Cylinder manufacturing plants, while private
respondent Pacific General Steel Manufacturing Corp.
(PGSMC) is a domestic corporation.
On March 5, 1997, PGSMC and KOGIES
executed a Contract[1]whereby KOGIES would set up
an LPG Cylinder Manufacturing Plant
Carmona, Cavite. The contract was executed
the Philippines. On April 7, 1997, the parties executed,
in Korea, an Amendment for Contract No. KLP-970301
dated March 5, 1997[2] amending the terms
payment. The contract and its amendment stipulated
that KOGIES will ship the machinery and facilities
necessary for manufacturing LPG cylinders for which
PGSMC would pay USD 1,224,000. KOGIES would
install and initiate the operation of the plant for which
PGSMC bound itself to pay USD 306,000 upon the
plants production of the 11-kg. LPG cylinder
samples. Thus, the total contract price amounted to
USD 1,530,000.
On October 14, 1997, PGSMC entered into a
Contract of Lease[3]with Worth Properties, Inc.
(Worth) for use of Worths 5,079-square meter
property with a 4,032-square meter warehouse
building to house the LPG manufacturing plant. The
monthly rental was PhP 322,560 commencing
on January 1, 1998 with a 10% annual increment
clause. Subsequently, the machineries, equipment, and
facilities for the manufacture of LPG cylinders were
shipped, delivered, and installed in the Carmona
plant.PGSMC paid KOGIES USD 1,224,000.
However, gleaned from
Certificate[4] executed by the parties on January 22,
1998, after the installation of the plant, the initial
operation could not be conducted as PGSMC
encountered financial difficulties affecting the supply
of materials, thus forcing the parties to agree that
KOGIES would be deemed to have completely
complied with the terms and conditions of the March
5, 1997 contract.
For the remaining balance of USD306,000 for
the installation and initial operation of the plant,
PGSMC issued two postdated checks: (1) BPI Check
No. 0316412 dated January 30, 1998 for PhP
4,500,000; and (2) BPI Check No. 0316413 dated
March 30, 1998 for PhP 4,500,000.[5]
When KOGIES deposited the checks, these
were dishonored for the reason PAYMENT
in STOPPED. Thus, on May 8, 1998, KOGIES sent a
in demand letter[6] to PGSMC threatening criminal action
for violation of Batas Pambansa Blg. 22 in case of
nonpayment. On the same date, the wife of PGSMCs
of President faxed a letter dated May 7, 1998 to KOGIES
President who was then staying at
a Makati City hotel. She complained that not only did
KOGIES deliver a different brand of hydraulic press
from that agreed upon but it had not delivered several
equipment parts already paid for.
On May 14, 1998, PGSMC replied that the two
checks it issued KOGIES were fully funded but the
payments were stopped for reasons previously made
known to KOGIES.[7]
On June 1, 1998, PGSMC informed KOGIES
that PGSMC was canceling their Contract dated March
5, 1997 on the ground that KOGIES had altered the
quantity and lowered the quality of the machineries
and equipment it delivered to PGSMC, and that PGSMC
would dismantle and transfer the machineries,
equipment, and facilities installed in the Carmona
plant. Five days later, PGSMC filed before the Office of
the Public Prosecutor an Affidavit-Complaint
for Estafa docketed as I.S. No. 98-03813 against Mr.
Dae Hyun Kang, President of KOGIES.
the
On June 15, 1998, KOGIES wrote PGSMC
informing the latter that PGSMC could not unilaterally
rescind their contract nor dismantle and transfer the
machineries and equipment on mere imagined
violations by KOGIES. It also insisted that their
disputes should be settled by arbitration as agreed
upon in Article 15, the arbitration clause of their
contract.
On June 23, 1998, PGSMC again wrote KOGIES
reiterating the contents of its June 1, 1998 letter
threatening that the machineries, equipment, and
193
facilities installed in the plant would be dismantled
and transferred on July 4, 1998. Thus, on July 1, 1998,
KOGIES instituted an Application for Arbitration
before the Korean Commercial Arbitration Board
(KCAB) in Seoul, Korea pursuant to Art. 15 of the
Contract as amended.
On July 3, 1998, KOGIES filed a
Complaint for Specific Performance, docketed as Civil
Case No. 98-117[8] against PGSMC before the
Muntinlupa City Regional Trial Court (RTC). The RTC
granted a temporary restraining order (TRO) on July 4,
1998, which was subsequently extended until July 22,
1998. In its complaint, KOGIES alleged that PGSMC had
initially admitted that the checks that were stopped
were not funded but later on claimed that it stopped
payment of the checks for the reason that their value
was not received as the former allegedly breached
their contract by altering the quantity and lowering
the quality of the machinery and equipment installed
in the plant and failed to make the plant operational
although it earlier certified to the contrary as shown in
a January 22, 1998 Certificate. Likewise, KOGIES
averred that PGSMC violated Art. 15 of their Contract,
as amended, by unilaterally rescinding the contract
without resorting to arbitration. KOGIES also asked
that PGSMC be restrained from dismantling and
transferring the machinery and equipment installed in
the plant which the latter threatened to do on July 4,
1998.
On July 9, 1998, PGSMC filed an opposition to
the TRO arguing that KOGIES was not entitled to the
TRO since Art. 15, the arbitration clause, was null and
void for being against public policy as it ousts the local
courts of jurisdiction over the instant controversy.
On July 17, 1998, PGSMC filed its Answer with
Compulsory Counterclaim[9] asserting that it had the
full right to dismantle and transfer the machineries
and equipment because it had paid for them in full as
stipulated in the contract; that KOGIES was not
entitled to the PhP 9,000,000 covered by the checks
for failing to completely install and make the plant
operational; and that KOGIES was liable for damages
amounting to PhP 4,500,000 for altering the quantity
and lowering the quality of the machineries and
equipment. Moreover, PGSMC averred that it has
already paid PhP 2,257,920 in rent (covering January
to July 1998) to Worth and it was not willing to further
shoulder the cost of renting the premises of the plant
considering that the LPG cylinder manufacturing plant
never became operational.
After the parties submitted their Memoranda,
on July 23, 1998, the RTC issued an Order denying the
application for a writ of preliminary injunction,
reasoning that PGSMC had paid KOGIES USD
1,224,000, the value of the machineries and
equipment as shown in the contract such that KOGIES
no longer had proprietary rights over them. And
finally, the RTC held that Art. 15 of the Contract as
amended was invalid as it tended to oust the trial
court or any other court jurisdiction over any dispute
that may arise between the parties. KOGIES prayer for
an injunctive writ was denied.[10]The dispositive
portion of the Order stated:
WHEREFORE, in view of the
foregoing consideration, this Court
believes and so holds that no cogent
reason exists for this Court to grant
the writ of preliminary injunction to
restrain and refrain defendant from
dismantling the machineries and
facilities at the lot and building of
Worth Properties, Incorporated at
Carmona, Cavite and transfer the
same to another site: and therefore
denies plaintiffs application for a writ
of preliminary injunction.
On July 29, 1998, KOGIES filed its Reply to
Answer and Answer to Counterclaim.[11] KOGIES
denied it had altered the quantity and lowered the
quality of the machinery, equipment, and facilities it
delivered to the plant. It claimed that it had performed
all the undertakings under the contract and had
already produced certified samples of LPG cylinders. It
averred that whatever was unfinished was PGSMCs
fault since it failed to procure raw materials due to
lack of funds. KOGIES, relying on Chung Fu Industries
(Phils.), Inc. v. Court of Appeals,[12] insisted that the
arbitration clause was without question valid.
194

After KOGIES filed a Supplemental
Memorandum with Motion to Dismiss[13] answering
PGSMCs memorandum of July 22, 1998 and seeking
dismissal of PGSMCs counterclaims, KOGIES, on
August 4, 1998,filed its Motion for
Reconsideration[14] of the July 23, 1998 Order denying
its application for an injunctive writ claiming that the
contract was not merely for machinery and facilities
worth USD 1,224,000 but was for the sale of an LPG
manufacturing plant consisting of supply of all the
machinery and facilities and transfer of technology for
a total contract price of USD 1,530,000 such that the
dismantling and transfer of the machinery and
facilities would result in the dismantling and transfer
of the very plant itself to the great prejudice of KOGIES
as the still unpaid owner/seller of the plant. Moreover,
KOGIES points out that the arbitration clause under
Art. 15 of the Contract as amended was a valid
arbitration stipulation under Art. 2044 of the Civil
Code and as held by this Court in Chung Fu Industries
(Phils.), Inc.[15]
In the meantime, PGSMC filed a Motion for
Inspection of Things[16] to determine whether there
was indeed alteration of the quantity and lowering of
quality of the machineries and equipment, and
whether these were properly installed. KOGIES
opposed the motion positing that the queries and
issues raised in the motion for inspection fell under
the coverage of the arbitration clause in their contract.
On September 21, 1998, the trial court issued
an Order (1) granting PGSMCs motion for inspection;
(2) denying KOGIES motion for reconsideration of the
July 23, 1998 RTC Order; and (3) denying KOGIES
motion to dismiss PGSMCs compulsory counterclaims
as these counterclaims fell within the requisites of
compulsory counterclaims.
On October 2, 1998, KOGIES filed an Urgent
Motion for Reconsideration[17] of the September 21,
1998 RTC Order granting inspection of the plant and
denying dismissal of PGSMCs compulsory
counterclaims.
Ten days after, on October 12, 1998, without
waiting for the resolution of its October 2, 1998 urgent
motion for reconsideration, KOGIES filed before the
Court of Appeals (CA) a petition for
certiorari[18] docketed as CA-G.R. SP No. 49249,
seeking annulment of the July 23, 1998 and September
21, 1998 RTC Orders and praying for the issuance of
writs of prohibition, mandamus, and preliminary
injunction to enjoin the RTC and PGSMC from
inspecting, dismantling, and transferring the
machineries and equipment in the Carmona plant, and
to direct the RTC to enforce the specific agreement on
arbitration to resolve the dispute.
In the meantime, on October 19, 1998, the
RTC denied KOGIES urgent motion for reconsideration
and directed the Branch Sheriff to proceed with the
inspection of the machineries and equipment in the
plant on October 28, 1998.[19]
Thereafter, KOGIES filed a Supplement to the
Petition[20] in CA-G.R. SP No. 49249 informing the CA
about the October 19, 1998 RTC Order. It also
reiterated its prayer for the issuance of the writs of
prohibition, mandamus and preliminary injunction
which was not acted upon by the CA. KOGIES asserted
that the Branch Sheriff did not have the technical
expertise to ascertain whether or not the machineries
and equipment conformed to the specifications in the
contract and were properly installed.
On November 11, 1998, the Branch Sheriff
filed his Sheriffs Report[21] finding that the enumerated
machineries and equipment were not fully and
properly installed.
The Court of Appeals affirmed the trial court and
declared
the arbitration clause against public policy
On May 30, 2000, the CA rendered the
assailed Decision[22]affirming the RTC Orders and
dismissing the petition for certiorari filed by
KOGIES. The CA found that the RTC did not gravely
abuse its discretion in issuing the assailed July 23,
195
 PETITION FOR CERTIORARI
1998 and September 21, 1998 Orders. Moreover, the
INTENDED ONLY FOR CORRECTION
CA reasoned that KOGIES contention that the total OF ERRORS OF JURISDICTION OR
GRAVE ABUSE OF DISCRETION
contract price for USD 1,530,000 was for the whole AMOUNTING TO LACK OF (SIC)
plant and had not been fully paid was contrary to the EXCESS OF JURISDICTION, AND
CONCLUDING THAT THE TRIAL
finding of the RTC that PGSMC fully paid the price of COURTS FINDING ON THE SAME
USD 1,224,000, which was for all the machineries and QUESTION WAS IMPROPERLY
RAISED IN THE PETITION BELOW;
equipment.According to the CA, this determination by
the RTC was a factual finding beyond the ambit of a b. DECLARING AS NULL AND VOID
THE ARBITRATION CLAUSE IN
petition for certiorari. ARTICLE 15 OF THE CONTRACT
BETWEEN THE PARTIES FOR BEING
CONTRARY TO PUBLIC POLICY AND
On the issue of the validity of the arbitration FOR OUSTING THE COURTS OF
JURISDICTION;
clause, the CA agreed with the lower court that an
arbitration clause which provided for a final c. DECREEING PRIVATE
RESPONDENTS COUNTERCLAIMS TO
determination of the legal rights of the parties to the
BE ALL COMPULSORY NOT
contract by arbitration was against public policy. NECESSITATING PAYMENT OF
DOCKET FEES AND CERTIFICATION
OF NON-FORUM SHOPPING;
On the issue of nonpayment of docket fees and
d. RULING THAT THE
non-attachment of a certificate of non-forum shopping PETITION WAS FILED
by PGSMC, the CA held that the counterclaims of PREMATURELY WITHOUT WAITING
FOR THE RESOLUTION OF THE
PGSMC were compulsory ones and payment of docket MOTION FOR RECONSIDERATION OF
fees was not required since the Answer with THE ORDER DATED SEPTEMBER 21,
1998 OR WITHOUT GIVING THE
counterclaim was not an initiatory pleading. For the TRIAL COURT AN OPPORTUNITY TO
same reason, the CA said a certificate of non-forum CORRECT ITSELF;

shopping was also not required. e. PROCLAIMING THE TWO

ORDERS DATED JULY 23
AND SEPTEMBER 21, 1998 NOT TO
Furthermore, the CA held that the petition for BE PROPER SUBJECTS OF
CERTIORARI AND PROHIBITION FOR
certiorari had been filed prematurely since KOGIES
BEING INTERLOCUTORY IN NATURE;
did not wait for the resolution of its urgent motion for
f. NOT GRANTING THE
reconsideration of the September 21, 1998 RTC Order
RELIEFS AND REMEDIES PRAYED
which was the plain, speedy, and adequate remedy FOR IN HE (SIC) PETITION AND,
INSTEAD, DISMISSING THE SAME
available. According to the CA, the RTC must be given FOR ALLEGEDLY WITHOUT
the opportunity to correct any alleged error it has MERIT.[23]
committed, and that since the assailed orders were
interlocutory, these cannot be the subject of a petition The Courts Ruling
for certiorari.

The petition is partly meritorious.

Hence, we have this Petition for Review on
Certiorari under Rule 45.
The Issues
Petitioner posits that the appellate court
committed the following errors:
a. PRONOUNCING THE QUESTION OF
OWNERSHIP OVER THE MACHINERY
AND FACILITIES AS A QUESTION OF
FACT BEYOND THE AMBIT OF A
Before we delve into the substantive issues,
we shall first tackle the procedural issues.
The rules on the payment of docket fees for
counterclaims
and cross claims were amended effective August
16, 2004
KOGIES strongly argues that when PGSMC
filed the counterclaims, it should have paid docket fees

196
and filed a certificate of non-forum shopping, and that
its failure to do so was a fatal defect.
We disagree with KOGIES.
As aptly ruled by the CA, the counterclaims of
PGSMC were incorporated in its Answer with
Compulsory Counterclaim dated July 17, 1998 in
accordance with Section 8 of Rule 11, 1997 Revised
Rules of Civil Procedure, the rule that was effective at
the time the Answer with Counterclaim was filed. Sec.
8 on existing counterclaim or cross-claimstates, A
compulsory counterclaim or a cross-claim that a
defending party has at the time he files his answer
shall be contained therein.
On July 17, 1998, at the time PGSMC filed its
Answer incorporating its counterclaims against
KOGIES, it was not liable to pay filing fees for said
counterclaims being compulsory in nature. We stress,
however, that effective August 16, 2004 under Sec. 7,
Rule 141, as amended by A.M. No. 04-2-04-SC, docket
fees are now required to be paid in compulsory
counterclaim or cross-claims.
As to the failure to submit a certificate of
forum shopping, PGSMCs Answer is not an initiatory
pleading which requires a certification against forum
shopping under Sec. 5[24] of Rule 7, 1997 Revised Rules
of Civil Procedure. It is a responsive pleading, hence,
the courts a quo did not commit reversible error in
denying KOGIES motion to dismiss PGSMCs
compulsory counterclaims.
Interlocutory orders proper subject of certiorari
Citing Gamboa v. Cruz,[25] the CA also
pronounced that certiorari and Prohibition are neither
the remedies to question the propriety of an
interlocutory order of the trial court.[26] The CA erred
on its reliance on Gamboa. Gamboa involved the denial
of a motion to acquit in a criminal case which was not
assailable in an action for certiorari since the denial of
a motion to quash required the accused to plead and
to continue with the trial, and whatever objections the
accused had in his motion to quash can then be used
as part of his defense and subsequently can be raised
as errors on his appeal if the judgment of the trial
court is adverse to him. The general rule is that
interlocutory orders cannot be challenged by an
appeal.[27] Thus, in Yamaoka v. Pescarich
Manufacturing Corporation, we held:
The proper remedy in such
cases is an ordinary appeal from an
adverse judgment on the merits,
incorporating in said appeal the
grounds for assailing the
interlocutory orders. Allowing
appeals from interlocutory orders
would result in the sorry spectacle of
a case being subject of a
counterproductive ping-pong to and
from the appellate court as often as a
trial court is perceived to have made
an error in any of its interlocutory
rulings. However, where the assailed
interlocutory order was issued with
grave abuse of discretion or patently
erroneous and the remedy of appeal
would not afford adequate and
expeditious relief, the Court allows
certiorari as a mode of redress.[28]
Also, appeals from interlocutory orders would
open the floodgates to endless occasions for dilatory
motions. Thus, where the interlocutory order was
issued without or in excess of jurisdiction or with
grave abuse of discretion, the remedy is certiorari.[29]
The alleged grave abuse of discretion of the
respondent court equivalent to lack of jurisdiction in
the issuance of the two assailed orders coupled with
the fact that there is no plain, speedy, and adequate
remedy in the ordinary course of law amply provides
the basis for allowing the resort to a petition for
certiorari under Rule 65.
Prematurity of the petition before the CA
Neither do we think that KOGIES was guilty of
forum shopping in filing the petition for
certiorari. Note that KOGIES motion for
reconsideration of the July 23, 1998 RTC Order which
denied the issuance of the injunctive writ had already
been denied. Thus, KOGIES only remedy was to assail
197
the RTCs interlocutory order via a petition for
Petitioner claims the RTC and the CA erred in
certiorari under Rule 65.
ruling that the arbitration clause is null and void.

While the October 2, 1998 motion for

Petitioner is correct.
reconsideration of KOGIES of the September 21, 1998
RTC Order relating to the inspection of things, and the
Established in this jurisdiction is the rule that
allowance of the compulsory counterclaims has not
the law of the place where the contract is made
yet been resolved, the circumstances in this case
governs. Lex loci contractus. The contract in this case
would allow an exception to the rule that before
was perfected here in the Philippines. Therefore, our
certiorari may be availed of, the petitioner must have
laws ought to govern. Nonetheless, Art. 2044 of the
filed a motion for reconsideration and said motion
Civil Code sanctions the validity of mutually agreed
should have been first resolved by the court a quo. The
arbitral clause or the finality and binding effect of an
reason behind the rule is to enable the lower court, in
arbitral award. Art. 2044 provides, Any stipulation
the first instance, to pass upon and correct its mistakes
that the arbitrators award or decision shall be
without the intervention of the higher court.[30]
final, is valid, without prejudice to Articles 2038,
2039 and 2040. (Emphasis supplied.)
The September 21, 1998 RTC Order directing
the branch sheriff to inspect the plant, equipment, and
Arts. 2038,[31] 2039,[32] and
facilities when he is not competent and knowledgeable
2040[33] abovecited refer to instances where a
on said matters is evidently flawed and devoid of any
compromise or an arbitral award, as applied to Art.
legal support. Moreover, there is an urgent necessity
2044 pursuant to Art. 2043,[34] may be voided,
to resolve the issue on the dismantling of the facilities
rescinded, or annulled, but these would not denigrate
and any further delay would prejudice the interests of
the finality of the arbitral award.
KOGIES. Indeed, there is real and imminent threat of
irreparable destruction or substantial damage to
The arbitration clause was mutually and
KOGIES equipment and machineries. We find the
voluntarily agreed upon by the parties. It has not been
resort to certiorari based on the gravely abusive
shown to be contrary to any law, or against morals,
orders of the trial court sans the ruling on the October
good customs, public order, or public policy. There has
2, 1998 motion for reconsideration to be proper.
been no showing that the parties have not dealt with
each other on equal footing.We find no reason why the
The Core Issue: Article 15 of the Contract
arbitration clause should not be respected and
complied with by both parties. In Gonzales v. Climax
We now go to the core issue of the validity of
Mining Ltd.,[35] we held that submission to arbitration
Art. 15 of the Contract, the arbitration clause. It
is a contract and that a clause in a contract providing
provides:
that all matters in dispute between the parties shall be
Article 15. Arbitration.All referred to arbitration is a contract.[36] Again in Del
disputes, controversies, or
Monte Corporation-USA v. Court of Appeals, we likewise
differences which may arise between
the parties, out of or in relation to or ruled that [t]he provision to submit to arbitration any
in connection with this Contract or
for the breach thereof, shall finally be dispute arising therefrom and the relationship of the
settled by arbitration in Seoul, Korea parties is part of that contract and is itself a
in accordance with the Commercial
Arbitration Rules of the Korean contract.[37]
Commercial Arbitration Board. The
award rendered by the
arbitration(s) shall be final and Arbitration clause not contrary to public policy
binding upon both parties
concerned. (Emphasis supplied.)

198
 The arbitration clause which stipulates that
the arbitration must be done in Seoul, Korea in
accordance with the Commercial Arbitration Rules of
the KCAB, and that the arbitral award is final and
binding, is not contrary to public policy. This Court has
sanctioned the validity of arbitration clauses in
a catena of cases. In the 1957 case of Eastboard
Navigation Ltd. v. Juan Ysmael and Co., Inc.,[38] this
Court had occasion to rule that an arbitration clause to
resolve differences and breaches of mutually agreed
contractual terms is valid. In BF Corporation v. Court of
Appeals, we held that [i]n this jurisdiction, arbitration
has been held valid and constitutional. Even before the
approval on June 19, 1953 of Republic Act No. 876,
this Court has countenanced the settlement of
disputes through arbitration. Republic Act No. 876
was adopted to supplement the New Civil Codes
provisions on arbitration.[39] And in LM Power
Engineering Corporation v. Capitol Industrial
Construction Groups, Inc., we declared that:
Being an inexpensive, speedy
and amicable method of settling
disputes, arbitrationalong with
mediation, conciliation and
negotiationis encouraged by the
Supreme Court. Aside from
unclogging judicial dockets,
arbitration also hastens the
resolution of disputes, especially of
the commercial kind. It is thus
regarded as the wave of the future in
international civil and commercial
disputes. Brushing aside a contractual
agreement calling for arbitration
between the parties would be a step
backward.
Consistent with the above-
mentioned policy of encouraging
alternative dispute resolution
methods, courts should liberally
construe arbitration clauses.
Provided such clause is susceptible of
an interpretation that covers the
asserted dispute, an order to
arbitrate should be granted. Any
doubt should be resolved in favor of
arbitration.[40]
Having said that the instant arbitration clause
is not against public policy, we come to the question
on what governs an arbitration clause specifying that
in case of any dispute arising from the contract, an
arbitral panel will be constituted in a foreign country
and the arbitration rules of the foreign country would
govern and its award shall be final and binding.
RA 9285 incorporated the UNCITRAL Model law
to which we are a signatory
For domestic arbitration proceedings, we
have particular agencies to arbitrate disputes arising
from contractual relations. In case a foreign arbitral
body is chosen by the parties, the arbitration rules of
our domestic arbitration bodies would not be
applied. As signatory to the Arbitration Rules of the
UNCITRAL Model Law on International Commercial
Arbitration[41] of the United Nations Commission on
International Trade Law (UNCITRAL) in the New York
Convention on June 21, 1985,
the Philippines committed itself to be bound by the
Model Law. We have even incorporated the Model Law
in Republic Act No. (RA) 9285, otherwise known as
the Alternative Dispute Resolution Act of
2004 entitled An Act to Institutionalize the Use of an
Alternative Dispute Resolution System in the Philippines
and to Establish the Office for Alternative Dispute
Resolution, and for Other Purposes, promulgated on
April 2, 2004. Secs. 19 and 20 of Chapter 4 of the
Model Law are the pertinent provisions:
CHAPTER 4 - INTERNATIONAL
COMMERCIAL ARBITRATION
SEC. 19. Adoption of the
Model Law on International
Commercial Arbitration.International
commercial arbitration shall be
governed by the Model Law on
International Commercial Arbitration
(the Model Law) adopted by the
United Nations Commission on
International Trade Law on June 21,
1985 (United Nations Document
A/40/17) and recommended for
enactment by the General Assembly
in Resolution No. 40/72 approved on
December 11, 1985, copy of which is
hereto attached as Appendix A.
199
 SEC. 20. Interpretation of parties to arbitration unless it finds
Model Law.In interpreting the Model that the arbitration agreement is null
Law, regard shall be had to its and void, inoperative or incapable of
international origin and to the need being performed.
for uniformity in its interpretation
and resort may be made to
the travaux preparatories and the
report of the Secretary General of the
United Nations Commission on
(2) Foreign arbitral awards must be confirmed by
International Trade Law dated March
25, 1985 entitled, International the RTC
Commercial Arbitration: Analytical
Commentary on Draft Trade
identified by reference number A/CN. Foreign arbitral awards while mutually
9/264.
stipulated by the parties in the arbitration clause to be
final and binding are not immediately enforceable or
cannot be implemented immediately. Sec. 35[43] of the
While RA 9285 was passed only in 2004, it
UNCITRAL Model Law stipulates the requirement for
nonetheless applies in the instant case since it is a
the arbitral award to be recognized by a competent
procedural law which has a retroactive
court for enforcement, which court under Sec. 36 of
effect.Likewise, KOGIES filed its application for
the UNCITRAL Model Law may refuse recognition or
arbitration before the KCAB on July 1, 1998 and it is
enforcement on the grounds provided for. RA 9285
still pending because no arbitral award has yet been
incorporated these provisos to Secs. 42, 43, and 44
rendered. Thus, RA 9285 is applicable to the instant
relative to Secs. 47 and 48, thus:
case. Well-settled is the rule that procedural laws are
construed to be applicable to actions pending and SEC. 42. Application of
the New York Convention.The New
undetermined at the time of their passage, and are
York Convention shall govern the
deemed retroactive in that sense and to that extent. As recognition and enforcement of
a general rule, the retroactive application of arbitral awards covered by said
Convention.
procedural laws does not violate any personal rights
because no vested right has yet attached nor arisen
from them.[42] The recognition and
enforcement of such arbitral awards
shall be filed with the Regional Trial
Among the pertinent features of RA 9285
Court in accordance with the rules of
applying and incorporating the UNCITRAL Model Law procedure to be promulgated by the
are the following: Supreme Court. Said procedural rules
shall provide that the party relying on
the award or applying for its
(1) The RTC must refer to arbitration in proper enforcement shall file with the court
cases the original or authenticated copy of
the award and the arbitration
agreement. If the award or agreement
Under Sec. 24, the RTC does not have is not made in any of the official
jurisdiction over disputes that are properly the subject languages, the party shall supply a
duly certified translation thereof into
of arbitration pursuant to an arbitration clause, and
any of such languages.
mandates the referral to arbitration in such cases,
thus:
The applicant shall establish
SEC. 24. Referral to that the country in which foreign
Arbitration.A court before which an arbitration award was made in party
action is brought in a matter which is
to the New York Convention.
the subject matter of an arbitration
agreement shall, if at least one party
so requests not later than the pre-
trial conference, or upon the request
xxxx
of both parties thereafter, refer the

200

SEC. 43. Recognition and
Enforcement of Foreign Arbitral
Awards Not Covered by the New York
Convention.The recognition and
enforcement of foreign arbitral
awards not covered by the New York
Convention shall be done in
accordance with procedural rules to
be promulgated by the Supreme
Court. The Court may, on grounds of
comity and reciprocity, recognize and
enforce a non-convention award as a
convention award.
SEC. 44. Foreign Arbitral Award Not
Foreign Judgment.A foreign arbitral
award when confirmed by a court of a
foreign country, shall be recognized
and enforced as a foreign arbitral
award and not as a judgment of a
foreign court.
A foreign arbitral award,
when confirmed by the Regional Trial
Court, shall be enforced in the same
manner as final and executory
decisions of courts of law of
the Philippines
xxxx
SEC. 47. Venue and
Jurisdiction.Proceedings for
recognition and enforcement of an
arbitration agreement or for
vacations, setting aside, correction or
modification of an arbitral award, and
any application with a court for
arbitration assistance and
supervision shall be deemed as
special proceedings and shall be filed
with the Regional Trial Court (i)
where arbitration proceedings are
conducted; (ii) where the asset to be
attached or levied upon, or the act to
be enjoined is located; (iii) where any
of the parties to the dispute resides
or has his place of business; or (iv) in
the National Judicial Capital Region,
at the option of the applicant.
SEC. 48. Notice of Proceeding
to Parties.In a special proceeding for
recognition and enforcement of an
arbitral award, the Court shall send
notice to the parties at their address
of record in the arbitration, or if any
part cannot be served notice at such
address, at such partys last known
address. The notice shall be sent al
least fifteen (15) days before the date
set for the initial hearing of the
application.
It is now clear that foreign arbitral awards
when confirmed by the RTC are deemed not as a
judgment of a foreign court but as a foreign arbitral
award, and when confirmed, are enforced as final and
executory decisions of our courts of law.
Thus, it can be gleaned that the concept of a
final and binding arbitral award is similar to
judgments or awards given by some of our quasi-
judicial bodies, like the National Labor Relations
Commission and Mines Adjudication Board, whose
final judgments are stipulated to be final and binding,
but not immediately executory in the sense that they
may still be judicially reviewed, upon the instance of
any party. Therefore, the final foreign arbitral awards
are similarly situated in that they need first to be
confirmed by the RTC.
(3) The RTC has jurisdiction to review foreign
arbitral awards
Sec. 42 in relation to Sec. 45 of RA 9285
designated and vested the RTC with specific authority
and jurisdiction to set aside, reject, or vacate a foreign
arbitral award on grounds provided under Art. 34(2)
of the UNCITRAL Model Law. Secs. 42 and 45 provide:
SEC. 42. Application of
the New York Convention.The New
York Convention shall govern the
recognition and enforcement of
arbitral awards covered by said
Convention.
The recognition and
enforcement of such arbitral awards
shall be filed with the Regional Trial
Court in accordance with the rules of
procedure to be promulgated by the
Supreme Court. Said procedural rules
shall provide that the party relying on
201
 the award or applying for its
enforcement shall file with the court
the original or authenticated copy of
the award and the arbitration
agreement. If the award or agreement
is not made in any of the official
languages, the party shall supply a
duly certified translation thereof into
any of such languages.
The applicant shall establish
that the country in which foreign
arbitration award was made is party
to the New York Convention.
If the application for
rejection or suspension of
enforcement of an award has been
made, the Regional Trial Court may, if
it considers it proper, vacate its
decision and may also, on the
application of the party claiming
recognition or enforcement of the
award, order the party to provide
appropriate security.
xxxx
SEC. 45. Rejection of a
Foreign Arbitral Award.A party to a
foreign arbitration proceeding may
oppose an application for recognition
and enforcement of the arbitral
award in accordance with the
procedures and rules to be
promulgated by the Supreme Court
only on those grounds enumerated
under Article V of the New York
Convention. Any other ground raised
shall be disregarded by the Regional
Trial Court.
Thus, while the RTC does not have jurisdiction
over disputes governed by arbitration mutually agreed
upon by the parties, still the foreign arbitral award is
subject to judicial review by the RTC which can set
aside, reject, or vacate it. In this sense, what this Court
held in Chung Fu Industries (Phils.), Inc. relied upon by
KOGIES is applicable insofar as the foreign arbitral
awards, while final and binding, do not oust courts of
jurisdiction since these arbitral awards are not
absolute and without exceptions as they are still
judicially reviewable. Chapter 7 of RA 9285 has made
it clear that all arbitral awards, whether domestic or
foreign, are subject to judicial review on specific
grounds provided for.
(4) Grounds for judicial review different in
domestic and foreign arbitral awards
The differences between a final arbitral award
from an international or foreign arbitral tribunal and
an award given by a local arbitral tribunal are the
specific grounds or conditions that vest jurisdiction
over our courts to review the awards.
For foreign or international arbitral awards
which must first be confirmed by the RTC, the grounds
for setting aside, rejecting or vacating the award by
the RTC are provided under Art. 34(2) of the
UNCITRAL Model Law.
For final domestic arbitral awards, which also
need confirmation by the RTC pursuant to Sec. 23 of
RA 876[44] and shall be recognized as final and
executory decisions of the RTC,[45] they may only be
assailed before the RTC and vacated on the grounds
provided under Sec. 25 of RA 876.[46]
(5) RTC decision of assailed foreign arbitral award
appealable
Sec. 46 of RA 9285 provides for an appeal
before the CA as the remedy of an aggrieved party in
cases where the RTC sets aside, rejects, vacates,
modifies, or corrects an arbitral award, thus:
SEC. 46. Appeal from Court
Decision or Arbitral Awards.A decision
of the Regional Trial Court
confirming, vacating, setting aside,
modifying or correcting an arbitral
award may be appealed to the Court
of Appeals in accordance with the
rules and procedure to be
promulgated by the Supreme Court.
The losing party who appeals
from the judgment of the court
confirming an arbitral award shall be
required by the appellate court to
post a counterbond executed in favor
202
 of the prevailing party equal to the
judicially assailed, is not applicable to the instant case
amount of the award in accordance
with the rules to be promulgated by on account of a valid stipulation on arbitration. Where
the Supreme Court.
an arbitration clause in a contract is availing, neither

Thereafter, the CA decision may further be of the parties can unilaterally treat the contract as

appealed or reviewed before this Court through a rescinded since whatever infractions or breaches by a

petition for review under Rule 45 of the Rules of Court. party or differences arising from the contract must be

PGSMC has remedies to protect its interests brought first and resolved by arbitration, and not
through an extrajudicial rescission or judicial action.

Thus, based on the foregoing features of RA

9285, PGSMC must submit to the foreign arbitration as The issues arising from the contract between

it bound itself through the subject contract. While it PGSMC and KOGIES on whether the equipment and

may have misgivings on the foreign arbitration done machineries delivered and installed were properly

in Korea by the KCAB, it has available remedies under installed and operational in the plant in Carmona,

RA 9285. Its interests are duly protected by the law Cavite; the ownership of equipment and payment of

which requires that the arbitral award that may be the contract price; and whether there was substantial

rendered by KCAB must be confirmed here by the RTC compliance by KOGIES in the production of the

before it can be enforced. samples, given the alleged fact that PGSMC could not
supply the raw materials required to produce the

With our disquisition above, petitioner is sample LPG cylinders, are matters proper for

correct in its contention that an arbitration clause, arbitration. Indeed, we note that on July 1, 1998,

stipulating that the arbitral award is final and binding, KOGIES instituted an Application for Arbitration

does not oust our courts of jurisdiction as the before the KCAB in Seoul, Korea pursuant to Art. 15 of

international arbitral award, the award of which is not the Contract as amended. Thus, it is incumbent upon

absolute and without exceptions, is still judicially PGSMC to abide by its commitment to arbitrate.

reviewable under certain conditions provided for by

the UNCITRAL Model Law on ICA as applied and Corollarily, the trial court gravely abused its

incorporated in RA 9285. discretion in granting PGSMCs Motion for Inspection

of Things on September 21, 1998, as the subject

Finally, it must be noted that there is nothing matter of the motion is under the primary jurisdiction

in the subject Contract which provides that the parties of the mutually agreed arbitral body, the KCAB

may dispense with the arbitration clause. in Korea.

In addition, whatever findings and

Unilateral rescission improper and illegal conclusions made by the RTC Branch Sheriff from the
inspection made on October 28, 1998, as ordered by

Having ruled that the arbitration clause of the the trial court on October 19, 1998, is of no worth as

subject contract is valid and binding on the parties, said Sheriff is not technically competent to ascertain

and not contrary to public policy; consequently, being the actual status of the equipment and machineries as

bound to the contract of arbitration, a party may not installed in the plant.

unilaterally rescind or terminate the contract for

whatever cause without first resorting to arbitration. For these reasons, the September 21,

What this Court held in University of the 1998 and October 19, 1998 RTC Orders pertaining to

Philippines v. De Los Angeles[47] and reiterated in the grant of the inspection of the equipment and

succeeding cases,[48] that the act of treating a contract machineries have to be recalled and nullified.

as rescinded on account of infractions by the other

contracting party is valid albeit provisional as it can be Issue on ownership of plant proper for arbitration

203

Petitioner assails the CA ruling that the issue
petitioner raised on whether the total contract price of
USD 1,530,000 was for the whole plant and its
installation is beyond the ambit of a Petition for
Certiorari.
Petitioners position is untenable.
It is settled that questions of fact cannot be raised in
an original action for certiorari.[49] Whether or not
there was full payment for the machineries and
equipment and installation is indeed a factual issue
prohibited by Rule 65.
However, what appears to constitute a grave abuse of
discretion is the order of the RTC in resolving the issue
on the ownership of the plant when it is the arbitral
body (KCAB) and not the RTC which has jurisdiction
and authority over the said issue. The RTCs
determination of such factual issue constitutes grave
abuse of discretion and must be reversed and set
aside.
from a Court to grant such
measure. After constitution of the
arbitral tribunal and during arbitral
proceedings, a request for an interim
measure of protection, or
modification thereof, may be made
with the arbitral or to the extent
that the arbitral tribunal has no
power to act or is unable to act
effectivity, the request may be
made with the Court. The arbitral
tribunal is deemed constituted when
the sole arbitrator or the third
arbitrator, who has been nominated,
has accepted the nomination and
written communication of said
nomination and acceptance has been
received by the party making the
request.
(b) The following rules on
interim or provisional relief shall be
observed:
Any party may request that
provisional relief be granted against
the adverse party.

Such relief may be granted:

RTC has interim jurisdiction to protect the rights
of the parties
(i) to prevent irreparable
loss or injury;
Anent the July 23, 1998 Order denying the
(ii) to provide security for
issuance of the injunctive writ paving the way for
the performance of any obligation;
PGSMC to dismantle and transfer the equipment and
(iii) to produce or preserve
machineries, we find it to be in order considering the
any evidence; or
factual milieu of the instant case.
(iv) to compel any other
appropriate act or omission.
Firstly, while the issue of the proper
installation of the equipment and machineries might
well be under the primary jurisdiction of the arbitral (c) The order granting
body to decide, yet the RTC under Sec. 28 of RA 9285 provisional relief may be conditioned
upon the provision of security or any
has jurisdiction to hear and grant interim measures to
act or omission specified in the order.
protect vested rights of the parties. Sec. 28 pertinently
provides:
(d) Interim or provisional
SEC. 28. Grant of interim relief is requested by written
Measure of Protection.(a) It is not application transmitted by
incompatible with an arbitration reasonable means to the Court or
agreement for a party to request, arbitral tribunal as the case may be
before constitution of the tribunal, and the party against whom the relief

204
 is sought, describing in appropriate
detail the precise relief, the party
against whom the relief is requested,
the grounds for the relief, and the
evidence supporting the request.
(e) The order shall be
binding upon the parties.
(f) Either party may apply
with the Court for assistance in
implementing or enforcing an interim
measure ordered by an arbitral
tribunal.
(g) A party who does not
comply with the order shall be liable
for all damages resulting from
noncompliance, including all
expenses, and reasonable attorney's
fees, paid in obtaining the orders
judicial enforcement. (Emphasis
ours.)
Art. 17(2) of the UNCITRAL Model Law
on ICA defines an interim measure of protection as:
Article 17. Power of arbitral tribunal
to order interim measures
xxx xxx xxx
(2) An interim measure is
any temporary measure, whether in
the form of an award or in another
form, by which, at any time prior to
the issuance of the award by which
the dispute is finally decided, the
arbitral tribunal orders a party to:
(a) Maintain or restore the status quo
pending determination of the dispute;
(b) Take action that would prevent,
or refrain from taking action that is
likely to cause, current or imminent
harm or prejudice to the arbitral
process itself;
(c) Provide a means of preserving
assets out of which a subsequent
award may be satisfied; or
(d) Preserve evidence that may be
relevant and material to the
resolution of the dispute.
Art. 17 J of UNCITRAL Model Law on ICA also
grants courts power and jurisdiction to issue interim
measures:
Article 17 J. Court-ordered interim
measures
A court shall have the same
power of issuing an interim measure
in relation to arbitration proceedings,
irrespective of whether their place is
in the territory of this State, as it has
in relation to proceedings in courts.
The court shall exercise such power
in accordance with its own
procedures in consideration of the
specific features of international
arbitration.
In the recent 2006 case of Transfield
Philippines, Inc. v. Luzon Hydro Corporation, we were
explicit that even the pendency of an arbitral
proceeding does not foreclose resort to the courts for
provisional reliefs. We explicated this way:
As a fundamental point, the pendency
of arbitral proceedings does not
foreclose resort to the courts for
provisional reliefs. The Rules of the
ICC, which governs the parties
arbitral dispute, allows the
application of a party to a judicial
authority for interim or conservatory
measures.Likewise, Section 14 of
Republic Act (R.A.) No. 876 (The
Arbitration Law) recognizes the
rights of any party to petition the
court to take measures to safeguard
and/or conserve any matter which is
the subject of the dispute in
arbitration. In addition, R.A. 9285,
otherwise known as the Alternative
Dispute Resolution Act of 2004,
205
 allows the filing of provisional or
through the RTC. Besides, by our decision, PGSMC is
interim measures with the regular
courts whenever the arbitral tribunal compelled to submit to arbitration pursuant to the
has no power to act or to act valid arbitration clause of its contract with KOGIES.
effectively.[50]

PGSMC to preserve the subject equipment and

machineries
It is thus beyond cavil that the RTC has
authority and jurisdiction to grant interim measures of Finally, while PGSMC may have been granted
protection. the right to dismantle and transfer the subject
equipment and machineries, it does not have the right
Secondly, considering that the equipment and to convey or dispose of the same considering the
machineries are in the possession of PGSMC, it has the pending arbitral proceedings to settle the differences
right to protect and preserve the equipment and of the parties. PGSMC therefore must preserve and
machineries in the best way it can. Considering that maintain the subject equipment and machineries with
the LPG plant was non-operational, PGSMC has the the diligence of a good father of a family [51] until final
right to dismantle and transfer the equipment and resolution of the arbitral proceedings and
machineries either for their protection and enforcement of the award, if any.
preservation or for the better way to make good use of
them which is ineluctably within the management
discretion of PGSMC.
WHEREFORE, this petition is PARTLY
Thirdly, and of greater import is the reason GRANTED, in that:
that maintaining the equipment and machineries in
Worths property is not to the best interest of PGSMC
due to the prohibitive rent while the LPG plant as set- (1) The May 30, 2000 CA Decision in CA-G.R.
up is not operational. PGSMC was losing PhP322,560 SP No. 49249 is REVERSED and SET ASIDE;
as monthly rentals or PhP3.87M for 1998 alone
without considering the 10% annual rent increment in
maintaining the plant. (2) The September 21, 1998 and October 19,
1998 RTC Orders in Civil Case No. 98-117
Fourthly, and corollarily, while the KCAB can are REVERSED and SET ASIDE;
rule on motions or petitions relating to the
preservation or transfer of the equipment and
machineries as an interim measure, yet on hindsight,
(3) The parties are hereby ORDERED to
the July 23, 1998 Order of the RTC allowing the
submit themselves to the arbitration of their dispute
transfer of the equipment and machineries given the
and differences arising from the subject Contract
non-recognition by the lower courts of the arbitral
before the KCAB; and
clause, has accorded an interim measure of protection
to PGSMC which would otherwise been irreparably
damaged.
(4) PGSMC is hereby ALLOWED to dismantle
and transfer the equipment and machineries, if it had
Fifth, KOGIES is not unjustly prejudiced as it
not done so, and ORDERED to preserve and maintain
has already been paid a substantial amount based on
them until the finality of whatever arbitral award is
the contract. Moreover, KOGIES is amply protected by
given in the arbitration proceedings.
the arbitral action it has instituted before the KCAB,
the award of which can be enforced in our jurisdiction

206
 No pronouncement as to costs.
ATTESTATION

SO ORDERED.
I attest that the conclusions in the above Decision had
been reached in consultation before the case was
assigned to the writer of the opinion of the Courts
Division.

PRESBITERO J. VELASCO, JR.

Associate Justice

LEONARDO A. QUISUMBING

Associate Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution,

and the Division Chairpersons Attestation, I certify
that the conclusions in the above Decision had been
reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.

WE CONCUR:

LEONARDO A. QUISUMBING

Associate Justice

Chairperson
REYNATO S. PUNO

Chief Justice

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

[1] Id. at 58-65; signed by KOGIES President
Dae Hyun Kang and PGSMC President Honorio
Santiago.
[2] Id. at 94.
[3] Id. at 208-218; signed by PGSMC President

Honorio Santiago and Worth President Wilson L. Chua.

[4] Id. at 95; signed by KOGIES President Dae

DANTE O. TINGA Hyun Kang and PGSMC President Honorio Santiago.

Associate Justice [5] Id. at 207.

[6] Id. at 221.
[7] Id. at 222.

207
 [8]Id. at 47-51; dated July 1, 1998.
[9]Id. at 66-82.
[10] Id. at 97.
[11] Id. at 83-89.
[12] G.R. No. 96283, February 25, 1992, 206
SCRA 545.
[13] Rollo, pp. 108-111.
[14] Id. at 98-100.
[15] Supra note 12.
[16] Rollo, pp. 101-105.
[17] Id. at 113-115.
[18] Id. at 120-146; dated October 9, 1998.
[19] Id. at 119.
[20] Id. at 116-118.
[21] Id. at 266-268.
[22] Id. at 40. Penned by Associate Justice Elvi
John S. Asuncion and concurred in by Associate
Justices Ma. Alicia Austria-Martinez and Portia Alio-
Hormachuelos.
[23] Id. at 16-17; original in boldface.
[24]SEC. 5. Certification against forum
shopping.The plaintiff or principal party shall certify
under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced
any action or filed any claim involving the same issues
in any court, tribunal or quasi-judicial agency and, to
the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the
present status thereof; and (c) if he should thereafter
learn that the same or similar action or claim has been
filed or is pending, he shall report that fact within five
(5) days therefrom to the court where his aforesaid
complaint or initiatory pleading has been filed.
(Emphasis supplied.)
Failure to comply with the foregoing
requirements shall not be curable by mere
amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the
case without prejudice, unless otherwise provided,
upon motion and after hearing. The submission of a
false certification or non-compliance with any of the
undertakings therein shall constitute indirect
contempt of court, without prejudice to the
corresponding administrative and criminal actions. If
the acts of the party or his counsel clearly constitute
willful and deliberate forum shopping, the same shall
be ground for summary dismissal with prejudice and
shall constitute direct contempt, as well as a cause for
administrative sanctions.
[25] G.R. No. L-56291, June 27, 1988, 162 SCRA
642.
[26] Rollo, p. 45.
[27] La Tondea Distillers, Inc. v. Ponferrada, G.R.
No. 109656, November 21, 1996, 264 SCRA
540; Mendoza v. Court of Appeals, G.R. No. 81909,
September 5, 1991, 201 SCRA 343; MB Finance
Corporation v. Abesamis, G.R. No. 93875, March 22,
1991, 195 SCRA 592; Quisumbing v. Gumban, G.R. No.
85156, February 5, 1991, 193 SCRA 520.
[28] G.R. No. 146079, July 20, 2001, 361 SCRA
672, 680-681, citing Go v. Court of Appeals, G.R. No.
128954, October 8, 1998, 297 SCRA 574.
[29] I Regalado, REMEDIAL LAW
COMPENDIUM 502 (2002).
[30] Id. at 721 (8th rev. ed.).
[31] Art. 2038. A compromise in which there is
mistake, fraud, violence, intimidation, undue influence,
or falsity of documents is subject to the provisions of
Article 1330 [voidable] of this Code.
However, one of the parties cannot set up a
mistake of fact as against the other if the latter, by
virtue of the compromise, has withdrawn from a
litigation already commenced.
[32] Art. 2039. When the parties compromise
generally on all differences which they might have
with each other, the discovery of documents referring
to one or more but not to all of the questions settled
shall not itself be a cause for annulment or rescission
of the compromise, unless said documents have been
concealed by one of the parties.
But the compromise may be annulled or
rescinded if it refers only to one thing to which one of
the parties has no right, as shown by the newly-
discovered documents.
[33] Art. 2040. If after a litigation has been
decided by a final judgment, a compromise should be
agreed upon, either or both parties being unaware of
the existence of the final judgment, the compromise
may be rescinded.
Ignorance of a judgment which may be
revoked or set aside is not a valid ground for attacking
a compromise.
[34] Art. 2043. The provisions of the preceding
Chapter upon compromises shall also be applicable to
arbitrations.
[35] G.R. No. 161957 and G.R. No. 167994,
January 22, 2007, 512 SCRA 148; citing Manila Electric
Co. v. Pasay Transportation Co., 57 Phil. 600 (1932).
[36] Id. at 603.
[37] G.R. No. 136154, February 7, 2001, 351
SCRA 373, 381.
[38] 102 Phil. 1 (1957).
[39] G.R. No. 120105, March 27, 1998, 288
SCRA 267, 286.
[40] G.R. No. 141833, March 26, 2003, 399
SCRA 562, 569-570; citations omitted.
[41] Adopted by the UNCITRAL on June 21,
1985 (United Nations Document A/40/17) and
recommended for enactment by the General Assembly
in Resolution No. 40/72, approved on 11 December
1985. Subsequently amended on July 7, 2006.
[42] In the Matter to Declare in Contempt of
Court Hon. Simeon A. Datumanong, Secretary of DPWH,
G.R. No. 150274, August 4, 2006, 497 SCRA 626, 636-
637; citing Calacala v. Republic, G.R. No. 154415, July
28, 2005, 464 SCRA 438, 446.
[43] Id. Art. 35(1) provides:
Article 35. Recognition and enforcement
(1) An arbitral award, irrespective of the country
in which it was made, shall be recognized as binding
and, upon application in writing to the competent
court, shall be enforced subject to the provisions of
this article and of article 36.
[44] An Act to Authorize the Making of Arbitration and
Submission Agreements, to Provide for the
Appointment of Arbitrators and the Procedure for
Arbitration in Civil Controversies, and for Other
Purposes (1953).
[45] RA 9285, Sec. 40.
[46] Id., Sec. 41.
[47] G.R. No. L-28602, September 29, 1970, 35
SCRA 102.
[48] See Lorenzo Shipping Corp. v. BJ Marthel
International, Inc., G.R. No. 145483. November 19,
2004, 443 SCRA 163; Subic Bay Metropolitan Authority
208
v. Universal International Group of Taiwan, G.R.
No. 131680, September 14, 2000, 340 SCRA
359; Philippine National Construction Corp. v. Mars
Construction Enterprises, Inc., G.R. No. 133909,
February 15, 2000, 325 SCRA 624; Cheng v. Genato,
G.R. No. 129760, December 29, 1998, 300 SCRA
722; Goldenrod, Inc. v. Court of Appeals, G.R. No.
126812, November 24, 1998, 299 SCRA 141; Adelfa
Properties, Inc. v. Court of Appeals, G.R. No. 111238,
January 25, 1995; 240 SCRA 565; Bowe v. Court of
Appeals, G.R. No. 95771, March 19, 1993, 220 SCRA
158; Lim v. Court of Appeals, G.R. No. 85733, February
23, 1990, 182 SCRA 564.
[49] Suarez v. NLRC, G.R. No. 124723, July 31,
1998, 293 SCRA 496, 502.
[50] G.R. No. 146717, May 19, 2006, 490 SCRA
14, 20-21.
[51] Cf. Article 1173 of the Civil Code.
3. DFA v. BCA Corporation, July 19, 2017
G.R. No. 225051
DEPARTMENT OF FOREIGN AFFAIRS
(DFA), Petitioner
vs.
BCA CORPORATION INTERNATIONAL & AD HOC
ARBITRAL TRIBUNAL, composed of Chairman
Danilo L. Concepcion and members, Custodio 0.
Parlade and Antonio P. Jamon, Jr., Respondents
DECISION
PERALTA, J.:
This is a petition for certiorari under Rule 65 of the
Rules of Court, seeking to annul and set aside
Procedural Order No. 11 dated February 15, 2016 and
Procedural Order No. 12 dated June 8, 2016, both
issued by the UNCITRAL Ad Hoc Arbitral Tribunal in
the arbitration proceedings between petitioner
Department of Foreign Affairs (DFA) and respondent
BCA International Corporation.
The facts are as follows:
In an Amended Build-Operate-
Transfer (BOT) Agreement1 dated April 5,
2002 (Agreement), petitioner DF A awarded the
Machine Readable Passport and Visa Project (MRP/V
Project) to respondent BCA International Corporation.
In the course of implementing the MRPN Project,
conflict arose and petitioner sought to terminate the
Agreement.
Respondent opposed the termination and filed a
Request for Arbitration on April 20, 2006. The Arbitral
Tribunal was constituted on June 29, 2009.2
In its Statement of Claims3 dated August 24, 2009,
respondent sought the following reliefs against
petitioner: (a) a judgment nullifying and setting aside
the Notice of Termination dated December 9, 2005 of
the DFA, including its demand to BCA to pay liquidated
damages equivalent to the corresponding performance
security bond posted by BCA; (b) a judgment
confirming the Notice of Default dated December 22,
2005 issued by BCA to the DF A and ordering the DF A
to perform its obligation under the Amended BOT
Agreement dated April 5, 2002 by approving the site
of the Central Facility at the Star Mall Complex in Shaw
Boulevard, Mandaluyong City, within five days from
receipt of the Arbitral A ward; (c) a judgment ordering
the DF A to pay damages to BCA, reasonably estimated
at ₱l00,000,000.00 as of this date, representing lost
business opportunities; financing fees, costs and
commissions; travel expenses; legal fees and expenses;
and cost of arbitration, including the fees of the
members of the Arbitral Tribunal; and (d) other just or
equitable relief.
On October 5, 2013, respondent manifested that it
shall file an Amended Statement of Claims so that its
claim may conform to the evidence they have
presented.4
Petitioner opposed respondent's manifestation,
arguing that such amendment at the very late stage of
the proceedings will cause undue prejudice to its
interests. However, the Arbitral Tribunal gave
respondent a period of time within which to file its
Amended Statement of Claims and gave petitioner
time to formally interpose its objections.5
In the Amended Statement of Claims6 dated October
25, 2013, respondent interposed the alternative relief
that, in the event specific performance by petitioner
was no longer possible, petitioner prayed that the
Arbitral Tribunal shall render judgment ordering
petitioner to pay respondent ₱l ,648,611,531.00,
representing the net income respondent is expected to
earn under the Agreement, and ₱l00,000,000.00 as
exemplary, temperate or nominal damages.7
In an Opposition dated December 19, 2013, petitioner
objected to respondent's Amended Statement of
Claims, averring that its belated filing violates its right
to due process and will prejudice its interest and that
the Tribunal has no jurisdiction over the alternative
reliefs sought by respondent.8
On August 6, 2014, respondent filed a Motion to
Withdraw Amended Statement of Claims9 in the light
of petitioner's opposition to the admission of the
Amended Statement of Claims and to avoid further
delay in the arbitration of its claims, without prejudice
to the filing of such claims for liquidated and other
damages at the appropriate time and proceeding.
Thereafter, respondent filed a motion to resume
proceedings.
However, on May 4, 2015, respondent filed anew a
Motion to Admit Attached Amended Statement of
Claims dated April 30, 2015, increasing the actual
damages sought to ₱390,000,000.00, plus an
additional ₱l0,000,000.00 for exemplary, temperate or
nominal damages.10
On November 6, 2015, petitioner filed an Opposition
to the Motion to Admit Attached Amended Statement
of Claims.
In Procedural Order No. 1111 dated February 15, 2016,
the Arbitral Tribunal granted resp9ndept' s Motion to
Admit Attached Amended Statement of Claims dated
209
April 30, 2015 on the premise that respondent would
no longer present any additional evidence-in-chief.
Petitioner was given a period of 20 days from receipt
of the Order to file its Answer to the Amended
Statement of Claims and to manifest before the
Tribunal if it will present additional evidence in
support of its Amended Answer in order for the
Tribunal to act accordingly.
Procedural Order No. 11 reads:
For resolution by the Tribunal is BCA's Motion to
Admit the Amended Statement of Claim dated 30 April
2015 objected to by DF A in its Opposition dated 6
November 2015.
BCA's Counsel made representations during the
hearings that the Amendment is for the simple
purp.ose of making the Statement of Claim conform
with what BCA believes it was able to prove in the
course of the proceedings and that the Amendment
will no longer require the presentation of any
additional evidence-in-chief.
Without ruling on what BCA was able to prove, the
Tribunal hereby grants the Motion to Admit on the
premise that BCA will no longer present any additional
evidence-in-chief to prove the bigger claim in the
Amended Statement.
For the additional claim of 300 million pesos, BCA
should pay the additional fee of 5% or 15 million
pesos. Having paid 12 million pesos, the balance of 3
million pesos shall be payable upon submission of this
case for resolution. No award shall be issued and
promulgated by the Tribunal unless the balance of
40% in the Arbitrators' fees for the original Claim and
Counterclaim, respectively, and the balance of 3
million for the Amended Claim, are all fully paid by the
parties.
DFA is hereby given the period of 20 days from receipt
of this Order to file its Answer to the Amended
Statement of Complaint, and to manifest before this
Tribunal if it will present additional evidence in
support of its Amended Answer in order for the
Tribunal to act accordingly.12
On February 18, 2016, respondent filed a Motion for
Partial Reconsideration13 of Procedural Order No. 11
and prayed for the admission of its Amended
Statement of Claims by the Arbitral Tribunal without
denying respondent's right to present evidence on the
actual damages, such as attorney's fees and legal cost
that it continued to incur.
On February 19, 2016, petitioner filed a Motion for
Reconsideration of Procedural Order No. 11 and,
likewise, filed a Motion to Suspend Proceedings dated
February 19, 2016. Further, on February 29, 2016,
petitioner filed its Comment/Opposition to
respondent's Motion for Partial Reconsideration of
Procedural Order No. 11.
The Arbitral Tribunal, thereafter, issued Procedural
Order No. 12 dated June 8, 2016, which resolved
respondent's Motion for Partial Reconsideration of
Procedural Order No. 11, disallowing the presentation
of additional evidence-in-chief by respondent to prove
the increase in the amount of its claim as a limitation
to the Tribunals' decision granting respondent's
Motion to Amend its Statement of Claims. In
Procedural Order No. 12, the Tribunal directed the
parties to submit additional documentary evidence in
support of their respective positions in relation to the
Amended Statement of Claims and to which the other
party may submit its comment or objections.
Procedural Order No. 12 reads:
For resolution is the partial Motion for
Reconsideration of the Tribunal's Procedural Order
No. 11 disallowing the presentation of additional
evidence-in-chief by Claimant to prove the increase in
the amount of its Claim as a limitation to this
Tribunal's decision granting Claimant's Motion to
Amend its Statement of Claims.
After a careful consideration of all the arguments
presented by the Parties in their pleadings, the
Tribunal hereby decides to allow the submission of
additional documentary evidence by any Party in
support of its position in relation to the Amended
Statement of Claims and to which the other may
submit its comments or objections. The Tribunal,
however, will still not allow the taking of testimonial
evidence from any witness by any Party. The Tribunal
allowed the amendment of the Statement of Claims but
only for the purpose of making the Statement of
Claims conform with the evidence that had already
been presented, assuming that, indeed, it was the case.
In resting its case, Respondent must have already dealt
with and addressed the evidence that had already
been presented by Claimant and that allegedly
supports the amended Claim. However, in order to
give the Parties more opportunity to prove their
respective positions, additional evidence shall be
accepted by the Tribunal, but only documentary
evidence.
Wherefore, Procedural Order No. 11 is modified
accordingly. The Claimant is given until 25 June 2016
to submit its additional documentary evidence in
support of the Amended Statement of Claims.
Respondent is given until 15 July 2016 to file its
Answer to the Amended Statement of Claims, together
with all the documentary evidence in support of its
position. Claimant is given until 30 July 2016 to
comment or oppose the Answer and the supporting
documentary evidence, while Respondent is given
until 14 August 2016 to file its comment or opposition
to the Claimant's submission, together with any
supporting documentary evidence. Thereafter, hearing
of the case shall be deemed terminated. The periods
allowed herein are non-extendible and the Tribunal
will not act on any motion for extension of time to
comply.
The Parties shall submit their Formal Offer of
Evidence, in the manner previously agreed upon, on
20 September 2016 while their respective
Memorandum shall be filed on 20 October 2016. The
Reply Memoranda of the Parties shall be filed on 20
November 2016. Thereafter, with or without the
foregoing submissions, the case shall be deemed
submitted for Resolution.14
210
As Procedural Order No. 12 denied petitioner's motion
for reconsideration of Procedural Order No. 11,
petitioner filed this petition for certiorari under Rule
65 of the Rules of Court with application for issuance
of a temporary restraining order and/or writ of
preliminary injunction, seeking to annul and set aside
Procedural Order No. 11 dated February 15, 2016 and
Procedural Order No. 12 dated June 8, 2016.
Petitioner stated that it opted to file the petition
directly with this court in view of the immensity of the
claim concerned, significance of the public interest
involved in this case, and the circumvention of the
temporary restraining order issued by this Court
in Department of Foreign Affairs v. BCA International
Corporation, docketed as G.R. No. 210858. It
cited Department of Foreign Affairs, et al. v. Hon. Judge
Falcon,15 wherein the Court overlooked the rule on
hierarchy of courts and took cognizance of the petition
for certiorari.
Petitioner raised these issues:
THE AD HOC ARBITRAL TRIBUNAL COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION WHEN IT ADMITTED
THE AMENDED STATEMENT OF CLAIMS DATED 30
APRIL 2015 NOTWITHSTANDING THAT:
I. THE AMENDMENT CAUSES UNDUE DELAY AND
PREJUDICE TO PETITIONER DF A;
II. THE ALTERNATIVE RELIEF IN THE AMENDED
STATEMENT OF CLAIMS FALLS OUTSIDE THE SCOPE
OF THE ARBITRATION CLAUSE; HENCE, OUTSIDE
THE JURISDICTION OF THE AD HOC ARBITRAL
TRIBUNAL;
III. THE AMENDMENT CIRCUMVENTS THE
TEMPORARY RESTRAINING ORDER DATED 02 APRIL
2014 ISSUED BY THIS HONORABLE COURT IN G.R. NO.
210858; AND
IV. PROCEDURAL ORDER NO. 12 DATED 8 JUNE 2016
VIOLATES PETITIONER DFA'S RIGHT TO DUE
PROCESS.16
Petitioner states that Article 20 of the 1976 UNCITRAL
Arbitration Rules grants a tribunal the discretion to
deny a motion to amend where the tribunal "considers
it inappropriate to allow such amendment having
regard to the delay in making it or prejudice to the
other party or any other circumstances." It further
proscribes an amendment where "the amended claim
falls outside the scope of the arbitral clause or
separate arbitration agreement."
Petitioner contends that respondent's Motion to Admit
Attached Amended Statement of Claims dated April
30, 2015 should have been denied by the Arbitral
Tribunal as there has been delay and prejudice to it.
Moreover, other circumstances such as fair and
efficient administration of the proceedings should
have warranted the denial of the motion to amend.
Finally, the Arbitral Tribunal did not have jurisdiction
over the amended claims.
Petitioner prays that a temporary restraining order
and/or writ of preliminary injunction be issued
enjoining the Arbitral Tribunal from implementing
Procedural Order No. 11 dated February 15, 2016 and
Procedural Order No. 12 dated June 8, 2016; that the
said Procedural Orders be nullified for having been
rendered in violation of the 1976 UNCITRAL
Arbitration Rules and this Court's Resolution dated
April 2, 2014 rendered in G.R. No. 210858; that
respondent's Amended Statement of Claims dated
April 30, 2015 be denied admission; and, if this Court
affirms the admission of respondent's Amended
Statement of Claims, petitioner be allowed to present
testimonial evidence to refute the allegations and
reliefs in the Amended Statement of Claims and to
prove its additional defenses or claims in its Answer to
the Amended Statement of Claims or Amended
Statement of Defense with Counterclaims.
Petitioner contends that the parties in this case have
agreed to refer any dispute to arbitration under the
1976 UNCITRAL Arbitration Rules and to compel a
party to be bound by the application of a different rule
on arbitration such as the Alternative Dispute
Resolution (ADR) Act of 2004 or Republic Act (RA) No.
9285 transgresses such vested right and amounts to
vitiation of consent to participate in the arbitration
proceedings.
In its Comment, respondent contends that this Court
has no jurisdiction to intervene in a private
arbitration, which is a special proceeding governed by
the ADR Act of 2004, its Implementing Rules and
Regulations (JRR) and the Special Rules of Court on
Alternative Dispute Resolution (Special ADR Rules).
Respondent avers that petitioner's objections to the
admission of its Amended Statement of Claims by the
Arbitral Tribunal, through the assailed Procedural
Order Nos. 11 and 12, are properly within the
competence and jurisdiction of the Arbitral Tribunal to
resolve. The Arbitral Tribunal derives their authority
to hear and resolve the parties' dispute from the
contractual consent of the parties expressed in Section
19. 02 of the Agreement.
In a Resolution dated July 25, 2016, the Court resolved
to note the Office of the Solicitor General's Very Urgent
Motion for the Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction dated
July 5, 2016.
In regard to the allegation that the Amended
Statement of Claims circumvents the temporary
restraining order dated April 2, 2014 issued by the
Court in DFA v. BCA International
Corporation, docketed as G.R. No. 210858, it should be
pointed out that the said temporary restraining order
has been superseded by the Court's Decision
promulgated on June 29, 2016, wherein the Court
resolved to partially grant the petition and remand the
case to the RTC of Makati City, Branch 146, to
determine whether the documents and records sought
to be subpoenaed are protected by the deliberative
process privilege as explained in the Decision.
The issues to be resolved at the outset are which laws
apply to the arbitration proceedings and whether the
petition filed before the Court is proper.
211
The Agreement provides for the resolution of dispute
between the parties in Section 19.02 thereof, thus:
If the Dispute cannot be settled amicably within ninety
(90) days by mutual discussion as contemplated under
Section 19.01 herein, the Dispute shall be settled with
finality by an arbitrage tribunal operating under
International Law, hereinafter referred to as
the "Tribunal," under the UNCITRAL Arbitration Rules
contained in Resolution 31/98 adopted by the United
Nations General Assembly on December 15, 1976, and
entitled "Arbitration Rules on the United Nations
Commission on the International Trade Law." The DFA
and BCA undertake to abide by and implement the
arbitration award. The place of arbitration shall be
Pasay City, Philippines, or such other place as may
mutually be agreed upon by both parties. The
Arbitration proceeding shall be conducted in the
English language.
Under Article 33 of the UNCITRAL Arbitration Rules
governing the parties, "the arbitral tribunal shall apply
the law designated by the parties as applicable to the
substance of the dispute." "Failing such designation by
the parties, the arbitral tribunal shall apply the law
determined by the conflict of laws rules which it
considers applicable." Established in this jurisdiction
is the rule that the law of the place where the contract
is made governs, or lex loci contractus.17 As the parties
did not designate the applicable law and the
Agreement was perfected in the Philippines, our
Arbitration laws, particularly, RA No. 876,18 RA No.
928519 and its IRR, and the Special ADR Rules
apply.20 The IRR of RA No. 9285 provides that "[t]he
arbitral tribunal shall decide the dispute in accordance
with such law as is chosen by the parties. In the
absence of such agreement, Philippine law shall
apply."21
In another earlier case filed by petitioner
entitled Department of Foreign Affairs v. BCA
International Corporation,22docketed as G.R. No.
210858, petitioner also raised as one of its issues that
the 1976 UNCITRAL Arbitration Rules and the Rules of
Court apply to the present arbitration proceedings, not
RA No. 9285 and the Special ADR Rules. We ruled
therein thus:
Arbitration is deemed a special proceeding and
governed by the special provisions of RA 9285, its IRR,
and the Special ADR Rules. RA 9285 is the general law
applicable to all matters and controversies to be
resolved through alternative dispute resolution
methods. While enacted only in 2004, we held that RA
9285 applies to pending arbitration proceedings since
it is a procedural law, which has retroactive effect.
xxxx
The IRR of RA 9285 reiterate that RA 9285 is
procedural in character and applicable to all pending
arbitration proceedings. Consistent with Article 2046
of the Civil Code, the Special ADR Rules were
formulated and were also applied to all pending
arbitration proceedings covered by RA 9285, provided
no vested rights are impaired. Thus, contrary to DFA's
contention, RA 9285, its IRR, and the Special ADR
Rules are applicable to the present arbitration
proceedings. The arbitration between the DF A and
BCA is still pending, since no arbitral award has yet
been rendered. Moreover, DF A did not allege any
vested rights impaired by the application of those
procedural rules.
RA No. 9285 declares the policy of the State to actively
promote pa1iy autonomy in the resolution of disputes
or the freedom of the parties to make their own
arrangements to resolve their disputes.23 Towards this
end, the State shall encourage and actively promote
the use of Alternative Dispute Resolution as an
important means to achieve speedy and impartial
justice and declog court dockets.24
Court intervention is allowed under RA No. 9285 in
the following instances: (1) when a party in the
arbitration proceedings requests for an interim
measure of protection;25 (2) judicial review of arbitral
awards26 by the Regional Trial Court (RTC); and (3)
appeal from the RTC decisions on arbitral awards to
the Court of Appeals.27
The extent of court intervention in domestic
arbitration is specified in the IRR of RA No. 9285, thus:
Art. 5.4. Extent of Court Intervention. In matters
governed by this Chapter, no court shall intervene
except in accordance with the Special ADR Rules.
Court intervention in the Special ADR Rules is allowed
through these remedies: (1) Specific Court Relief,
which includes Judicial Relief Involving the Issue of
Existence, Validity and Enforceability of the Arbitral
Agreement,28Interim Measures of
Protection,29 Challenge to the Appointment of
Arbitrator,30 Termination of Mandate of
Arbitrator,31 Assistance in Taking
Evidence,32 Confidentiality/Protective
Orders,33 Confirmation, Correction or Vacation of A
ward in Domestic Arbitration,34 all to be filed with the
RTC; (2) a motion for reconsideration may be filed by
a party with the RTC on the grounds specified in Rule
19.1; (3) an appeal to the Court of Appeals through a
petition for review under Rule 19.2 or through a
special civil action for certiorari under Rule 19.26; and
(4) a petition for certiorari with the Supreme Court
from a judgment or final order or resolution of the
Court of Appeals, raising only questions of law.
Under the Special ADR Rules, review by the Supreme
Court of an appeal by certiorari is not a matter of right,
thus:
RULE 19.36. Review Discretionary. - A review by the
Supreme Court is not a matter of right, but of sound
judicial discretion, which will be granted only for
serious and compelling reasons resulting in grave
prejudice to the aggrieved party. The following, while
neither controlling nor fully measuring the court's
discretion, indicate the serious and compelling, and
necessarily, restrictive nature of the grounds that will
warrant the exercise of the Supreme Court's
discretionary powers, when the Court of Appeals:
a. Failed to apply the applicable standard or test for
judicial review prescribed in these Special ADR Rules
in arriving at its decision resulting in substantial
prejudice to the aggrieved party;
212
b. Erred in upholding a final order or decision despite WE CONCUR:
the lack of jurisdiction of the court that rendered such
final order or decision; ANTONIO T. CARPIO
Associate Justice
c. Failed to apply any provision, principle, policy or Chairperson
rule contained in these Special ADR Rules resulting in
substantial prejudice to the aggrieved party; and On wellness leave
JOSE CATRAL
d. Committed an error so egregious and harmful to a MENDOZA MARVIC M.V.F.
party as to amount to an undeniable excess of Associate Justice LEONEN
jurisdiction. Associate Justice

The mere fact that the petitioner disagrees with the

Court of Appeals' determination of questions of fact, of SAMUEL R. MARTIRES
law or both questions of fact and law, shall not Associate Justice
warrant the exercise of the Supreme Court's
discretionary power. The error imputed to the Court ATTESTATION
of Appeals must be grounded upon any of the above
prescribed grounds for review or be closely analogous I attest that the conclusions in the above Decision had
thereto. been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s
A mere general allegation that the Court of Appeals Division.
has committed serious and substantial error or that it
has acted with grave abuse of discretion resulting in ANTONIO T. CARPIO
substantial prejudice to the petitioner without Associate Justice
indicating with specificity the nature of such error or Chairperson, Second Division
abuse of discretion and the serious prejudice suffered
by the petitioner on account thereof, shall constitute CERTIFICATION
sufficient ground for the Supreme Court to dismiss
outright the petition. Pursuant to the Section 13, Article VIII of the
Constitution and the Division Chairperson’s
RULE 19.37. Filing of Petition with Supreme Court. - A Attestation, I certify that the conclusions in the above
party desiring to appeal by certiorari from a judgment Decision had been reached in consultation before the
or final order or resolution of the Court of Appeals case was assigned to the writer of the opinion of the
issued pursuant to these Special ADR Rules may file Court’s Division.
with the Supreme Court a verified petition for review
on certiorari. The petition shall raise only questions of MARIA LOURDES P.A. SERENO
law, which must be distinctly set forth.1âwphi1 Chief Justice

It is clear that an appeal by certiorari to the Supreme

Court is from a judgment or final order or resolution of
the Court of Appeals and only questions of law may be
raised. There have been instances when we
Footnotes
overlooked the rule on hierarchy of courts and took
cognizance of a petition for certiorari alleging grave
abuse of discretion by the Regional Trial Court when it
* On wellness leave.
granted interim relief to a party and issued an Order
assailed by the petitioner, considering the 1 Rollo, pp. 273-297.
transcendental importance of the issue involved
therein35 or to better serve the ends of justice when 2Composed of Atty. Danilo Concepcion as
the case is determined on the merits rather on Chairman, and Dean Custodio 0. Parlade and
technicality.36 However, in this case, the appeal Atty. Antonio P. Jamon, Jr., as members.
by certiorari is not from a final Order of the Court of
Appeals or the Regional Trial Court, but from an 3 Rollo, pp. 377-385.
interlocutory order of the Arbitral Tribunal; hence, the
petition must be dismissed. 4 Id. at 17.
WHEREFORE, the Court resolves to DISMISS the 5 Id.
petition for failure to observe the rules on court
intervention allowed by RA No. 9285 and the Special
ADR Rules, specifically Rule 19.36 and Rule 19.37 of
6 Id. at 318-328.
the latter, in the pending arbitration proceedings of
the parties to this case. 7 Id. at 328.

SO ORDERED. 8 Id. at l7.

DIOSDADO M. PERALTA 9 Id. at 371.

Associate Justice

213
10BCA seeks the following relief against the 24 Id.
DF A: (a) a judgment nullifying and setting
aside the Notice of Termination dated 25SECTION 28. Grant of Interim Measure of
December 9, 2005 of DFA, including its Protection. - (a) It is not incompatible with an
demand to BCA to pay liquidated damages arbitration agreement for a party to request,
equivalent to the correspondent performance before constitution of the tribunal, from a
security bond posted by BCA; (b) a judgment Court (RTC) an interim measure of protection
confirming the Notice of Default 9ated and for the Court to grant such measure. After
December 22, 2005 issued by BCA to DFA and constitution of the arbitral tribunal and
ordering DFA to perform its obligation under during arbitral proceedings, a request for an
the Amended BOT Agreement dated April 5, interim measure of protection, or
2002 by approving the site of the Central modification thereof, may be made with the
Facility and proceeding with the arbitral tribunal or to the extent that the
implementation of Phase 2 of the MRP/V arbitral tribunal has no power to act or is
Project, within thirty (30) days from receipt of unable to act effectively, the request may be
the Arbitral Award; (c) a judgment ordering made with the Com1. The arbitral tribunal is
DFA to pay actual damages to BCA, reasonably deemed constituted when the sole arbitrator
estimated at ₱390.OO0,000.00 as of this date, or the third arbitrator, who has been
representing lost business opportunities; legal nominated, has accepted the nomination and
fees and expenses, including attorney's fees written communication of said nomination
that BCA has incurred sis a result of DFA's and acceptance has been received by the
unlawful attempted termination of the party making the request.
Amended BOT Agreement; and cost of
arbitration, including the foes of the members (b) The following rules on interim or
of the Honorable Tribunal, plus an additional provisional relief shall be observed:
₱10,000,000.00 for exemplary, temperate or
nominal damages; and (d) other just or
equitable relief. (1) Any party may request
that provisional relief be
granted against the adverse
11 Rollo, p. 39. patty.
12 ld. at 39. (2) Such relief may be
granted:
13 Dated February 17, 2016.
(i) to prevent
14 Rollo, p. 40. irreparable loss or
injury;
15 644 Phil. 105 (2010).
(ii) to provide
16 Rollo, pp. 19-20. security for the
performance of any
17Department of Foreign Affairs v. BCA obligation;
international Corporation, G.R. No. 210858,
June 29, 2016. (iii) to produce or
preserve any
18An Act to Authorize the Making of evidence; or
Arbitration and Submission Agreements, to
Provide for the Appointment of Arbitrators and (iv) to compel any
the Procedure for Arbitration in Civil other appropriate
Controversies, and For Other Purposes. act or omission.

19An Act to Institutionalize the Use of an (3) The order granting

Alternative Dispute Resolution System in the provisional relief may be
Philippines and to Establish the Office for conditioned upon the
Alternative Dispute Resolution, and For Other provision of security or any
Purposes. act or omission specified in
the order.
20Department of Foreign Affairs v. BCA
International Corporation, G.R. No. 210858, (4) Interim or provisional
June 29, 2016. relief is requested by written
application transmitted by
21Art. 5.28, Department Circular No. 98 or IRR reasonable means to the
of RA No. 9285. Court or arbitral tribunal as
the case may be and the
22 Supra note 17. party against whom the relief
is sought, describing in
appropriate detail the
23 RA No. 9285, Section 2. precise relief, the party

214
 against whom the relief is
requested, the grounds for
the relief, and the evidence
supporting the request.
(5) The order shall be
binding upon the parties.
(6) Either party may apply
with the Com1 for assistance
in implementing or enforcing
an interim measure ordered
by an arbitral tribunal.
(7) A patty who does not
comply with the order shall
be liable for all damages
resulting from
noncompliance, including all
expenses, and reasonable
attorney's fees, paid in
obtaining the order's judicial
enforcement.
26SECTION 40. Confirmation of Award. - The
confirmation of a domestic arbitral award
shall be governed by Section 23 of R.A. No.
876.
A domestic arbitral award when
confirmed shall be enforced in the
same manner as final and executory
decisions of the Regional Trial Court.
The recognition and enforcement of
an award in an international
commercial arbitration shall be
governed by Article 35 of the Model
Law.
The confirmation of a domestic
award shall be made by the Regional
Trial Court in accordance with the
Rules of Procedure to be promulgated
by the Supreme Court.
SECTION 41. Vacation Award. - A
party to a domestic arbitration may
question the arbitral award with the
appropriate Regional Trial Court in
accordance with rules of procedure to
be promulgated by the Supreme
Court only on those grounds
enumerated in Section 25 of Republic
Act No. 876. Any other ground raised
against a domestic arbitral award
shall be disregarded by the Regional
Trial Court.
27SECTION 46. Appeal from Court Decisions on
Arbitral Awards. - A decision of the Regional
Trial Court confirming, vacating, setting aside,
modifying or correcting an arbitral award
may be appealed to the Court of Appeals in
accordance with the rules of procedure to be
promulgated by the Supreme Court.
The losing party who appeals from
the judgment of the court confirming
an arbitral award shall be required by
the appellate court to post a
counterbond executed in favor of the
prevailing party equal to the amount
of the award in accordance with the
rules to be promulgated by the
Supreme Court.
28 Rule 3.
29 Rule 5.
30 Rule 7.
31 Rule 8.
32 Rule 9.
33 Rule 10.
34 Rule 11.
35Department of Foreign Affairs, et al. v. Hon.
Judge Falcon, supra note 15.
36Department of Foreign Affairs v. BCA
International Corporation, supra note 17.
The Lawphil Project - Arellano Law Foundation
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization
Trust, RAUL MANGLAPUS, as Secretary of Foreign
Affairs, and CATALINO MACARAIG, as Executive
Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS
PRIVATIZATION TRUST CHAIRMAN RAMON T.
GARCIA, AMBASSADOR RAMON DEL ROSARIO, et
al., as members of the PRINCIPAL AND BIDDING
COMMITTEES ON THE UTILIZATION/DISPOSITION
PETITION OF PHILIPPINE GOVERNMENT
PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to
enjoin respondents, their representatives and
agents from proceeding with the bidding for the
sale of the 3,179 square meters of land at 306
215
Roppongi, 5-Chome Minato-ku Tokyo, Japan
scheduled on February 21, 1990. We granted the
prayer for a temporary restraining order effective
February 20, 1990. One of the petitioners (in G.R.
No. 92047) likewise prayes for a writ of
mandamus to compel the respondents to fully
disclose to the public the basis of their decision to
push through with the sale of the Roppongi
property inspire of strong public opposition and to
explain the proceedings which effectively prevent
the participation of Filipino citizens and entities in
the bidding process.
The oral arguments in G.R. No. 92013, Laurel v.
Garcia, et al. were heard by the Court on March 13,
1990. After G.R. No. 92047, Ojeda v. Secretary
Macaraig, et al. was filed, the respondents were
required to file a comment by the Court's
resolution dated February 22, 1990. The two
petitions were consolidated on March 27, 1990
when the memoranda of the parties in
the Laurel case were deliberated upon.
The Court could not act on these cases
immediately because the respondents filed a
motion for an extension of thirty (30) days to file
comment in G.R. No. 92047, followed by a second
motion for an extension of another thirty (30) days
which we granted on May 8, 1990, a third motion
for extension of time granted on May 24, 1990 and
a fourth motion for extension of time which we
granted on June 5, 1990 but calling the attention of
the respondents to the length of time the petitions
have been pending. After the comment was filed,
the petitioner in G.R. No. 92047 asked for thirty
(30) days to file a reply. We noted his motion and
resolved to decide the two (2) cases.
I buildings in Roppongi and one (1) building in
The subject property in this case is one of the four
(4) properties in Japan acquired by the Philippine
government under the Reparations Agreement
entered into with Japan on May 9, 1956, the other
lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-
machi, Shibuya-ku, Tokyo which has an area of
approximately 2,489.96 square meters, and is at
present the site of the Philippine Embassy
Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-
cho, Kobe, with an area of around 764.72 square
meters and categorized as a commercial lot now
being used as a warehouse and parking lot for the
consulate staff; and
(3) The Kobe Residential Property at 1-980-2
Obanoyama-cho, Shinohara, Nada-ku, Kobe, a
residential lot which is now vacant.
The properties and the capital goods and services
procured from the Japanese government for
national development projects are part of the
indemnification to the Filipino people for their
losses in life and property and their suffering
during World War II.
The Reparations Agreement provides that
reparations valued at $550 million would be
payable in twenty (20) years in accordance with
annual schedules of procurements to be fixed by
the Philippine and Japanese governments (Article
2, Reparations Agreement). Rep. Act No. 1789, the
Reparations Law, prescribes the national policy on
procurement and utilization of reparations and
development loans. The procurements are divided
into those for use by the government sector and
those for private parties in projects as the then
National Economic Council shall determine. Those
intended for the private sector shall be made
available by sale to Filipino citizens or to one
hundred (100%) percent Filipino-owned entities
in national development projects.
The Roppongi property was acquired from the
Japanese government under the Second Year
Schedule and listed under the heading
"Government Sector", through Reparations
Contract No. 300 dated June 27, 1958. The
Roppongi property consists of the land and
building "for the Chancery of the Philippine
Embassy" (Annex M-D to Memorandum for
Petitioner, p. 503). As intended, it became the site
of the Philippine Embassy until the latter was
transferred to Nampeidai on July 22, 1976 when
the Roppongi building needed major repairs. Due
to the failure of our government to provide
necessary funds, the Roppongi property has
remained undeveloped since that time.
A proposal was presented to President Corazon C.
Aquino by former Philippine Ambassador to Japan,
Carlos J. Valdez, to make the property the subject
of a lease agreement with a Japanese firm - Kajima
Corporation — which shall construct two (2)
Nampeidai and renovate the present Philippine
Chancery in Nampeidai. The consideration of the
construction would be the lease to the foreign
corporation of one (1) of the buildings to be
constructed in Roppongi and the two (2) buildings
in Nampeidai. The other building in Roppongi shall
then be used as the Philippine Embassy Chancery.
At the end of the lease period, all the three leased
buildings shall be occupied and used by the
Philippine government. No change of ownership or
title shall occur. (See Annex "B" to Reply to
Comment) The Philippine government retains the
title all throughout the lease period and
thereafter. However, the government has not acted
favorably on this proposal which is pending
approval and ratification between the parties.
Instead, on August 11, 1986, President Aquino
created a committee to study the
disposition/utilization of Philippine government
properties in Tokyo and Kobe, Japan through
Administrative Order No. 3, followed by
Administrative Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive
Order No. 296 entitling non-Filipino citizens or
entities to avail of separations' capital goods and
services in the event of sale, lease or disposition.
The four properties in Japan including the
Roppongi were specifically mentioned in the first
"Whereas" clause.
216
Amidst opposition by various sectors, the
Executive branch of the government has been
pushing, with great vigor, its decision to sell the
reparations properties starting with the Roppongi
lot. The property has twice been set for bidding at
a minimum floor price of $225 million. The first
bidding was a failure since only one bidder
qualified. The second one, after postponements,
has not yet materialized. The last scheduled
bidding on February 21, 1990 was restrained by
his Court. Later, the rules on bidding were changed
such that the $225 million floor price became
merely a suggested floor price.
The Court finds that each of the herein petitions
raises distinct issues. The petitioner in G.R. No.
92013 objects to the alienation of the Roppongi
property to anyone while the petitioner in G.R. No.
92047 adds as a principal objection the alleged
unjustified bias of the Philippine government in
favor of selling the property to non-Filipino
citizens and entities. These petitions have been
consolidated and are resolved at the same time for
the objective is the same - to stop the sale of the
Roppongi property.
The petitioner in G.R. No. 92013 raises the
following issues:
(1) Can the Roppongi property and others of its
kind be alienated by the Philippine Government?;
and
(2) Does the Chief Executive, her officers and
agents, have the authority and jurisdiction, to sell
the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart
from questioning the authority of the government
to alienate the Roppongi property assails the
constitutionality of Executive Order No. 296 in
making the property available for sale to non-
Filipino citizens and entities. He also questions the
bidding procedures of the Committee on the
Utilization or Disposition of Philippine
Government Properties in Japan for being
discriminatory against Filipino citizens and
Filipino-owned entities by denying them the right
to be informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the
Roppongi property and the related lots were
acquired as part of the reparations from the
Japanese government for diplomatic and consular
use by the Philippine government. Vice-President
Laurel states that the Roppongi property is
classified as one of public dominion, and not of
private ownership under Article 420 of the Civil
Code (See infra).
The petitioner submits that the Roppongi property
comes under "property intended for public
service" in paragraph 2 of the above provision. He
states that being one of public dominion, no
ownership by any one can attach to it, not even by
the State. The Roppongi and related properties
were acquired for "sites for chancery, diplomatic,
and consular quarters, buildings and other
improvements" (Second Year Reparations
Schedule). The petitioner states that they continue
to be intended for a necessary service. They are
held by the State in anticipation of an opportune
use. (Citing 3 Manresa 65-66). Hence, it cannot be
appropriated, is outside the commerce of man, or
to put it in more simple terms, it cannot be
alienated nor be the subject matter of contracts
(Citing Municipality of Cavite v. Rojas, 30 Phil. 20
[1915]). Noting the non-use of the Roppongi
property at the moment, the petitioner avers that
the same remains property of public dominion so
long as the government has not used it for other
purposes nor adopted any measure constituting a
removal of its original purpose or use.
The respondents, for their part, refute the
petitioner's contention by saying that the subject
property is not governed by our Civil Code but by
the laws of Japan where the property is located.
They rely upon the rule of lex situs which is used in
determining the applicable law regarding the
acquisition, transfer and devolution of the title to a
property. They also invoke Opinion No. 21, Series
of 1988, dated January 27, 1988 of the Secretary of
Justice which used the lex situs in explaining the
inapplicability of Philippine law regarding a
property situated in Japan.
The respondents add that even assuming for the
sake of argument that the Civil Code is applicable,
the Roppongi property has ceased to become
property of public dominion. It has become
patrimonial property because it has not been used
for public service or for diplomatic purposes for
over thirteen (13) years now (Citing Article 422,
Civil Code) and because the intention by the
Executive Department and the Congress to convert
it to private use has been manifested by overt acts,
such as, among others: (1) the transfer of the
Philippine Embassy to Nampeidai (2) the issuance
of administrative orders for the possibility of
alienating the four government properties in
Japan; (3) the issuance of Executive Order No. 296;
(4) the enactment by the Congress of Rep. Act No.
6657 [the Comprehensive Agrarian Reform Law]
on June 10, 1988 which contains a provision
stating that funds may be taken from the sale of
Philippine properties in foreign countries; (5) the
holding of the public bidding of the Roppongi
property but which failed; (6) the deferment by
the Senate in Resolution No. 55 of the bidding to a
future date; thus an acknowledgment by the
Senate of the government's intention to remove
the Roppongi property from the public service
purpose; and (7) the resolution of this Court
dismissing the petition in Ojeda v. Bidding
Committee, et al., G.R. No. 87478 which sought to
enjoin the second bidding of the Roppongi
property scheduled on March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks
this Court to rule on the constitutionality of
Executive Order No. 296. He had earlier filed a
petition in G.R. No. 87478 which the Court
dismissed on August 1, 1989. He now avers that
217
the executive order contravenes the constitutional
mandate to conserve and develop the national
patrimony stated in the Preamble of the 1987
Constitution. It also allegedly violates:
(1) The reservation of the ownership and
acquisition of alienable lands of the public domain
to Filipino citizens. (Sections 2 and 3, Article XII,
Constitution; Sections 22 and 23 of Commonwealth
Act 141).i•t•c-aüsl
(2) The preference for Filipino citizens in the grant
of rights, privileges and concessions covering the
national economy and patrimony (Section 10,
Article VI, Constitution);
(3) The protection given to Filipino enterprises
against unfair competition and trade practices;
(4) The guarantee of the right of the people to
information on all matters of public concern
(Section 7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino
citizens or entities not wholly owned by Filipino
citizens of capital goods received by the
Philippines under the Reparations Act (Sections 2
and 12 of Rep. Act No. 1789); and
(6) The declaration of the state policy of full public
disclosure of all transactions involving public
interest (Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds
in the execution of an unconstitutional executive
order is a misapplication of public funds He states
that since the details of the bidding for the
Roppongi property were never publicly
disclosed until February 15, 1990 (or a few days
before the scheduled bidding), the bidding
guidelines are available only in Tokyo, and the
accomplishment of requirements and the selection
of qualified bidders should be done in Tokyo,
interested Filipino citizens or entities owned by
them did not have the chance to comply with
Purchase Offer Requirements on the Roppongi.
Worse, the Roppongi shall be sold for a minimum
price of $225 million from which price capital
gains tax under Japanese law of about 50 to 70% of
the floor price would still be deducted.
IV
The petitioners and respondents in both cases do
not dispute the fact that the Roppongi site and the
three related properties were through reparations
agreements, that these were assigned to the
government sector and that the Roppongi
property itself was specifically designated under
the Reparations Agreement to house the
Philippine Embassy.
The nature of the Roppongi lot as property for
public service is expressly spelled out. It is
dictated by the terms of the Reparations
Agreement and the corresponding contract of
procurement which bind both the Philippine
government and the Japanese government.
There can be no doubt that it is of public dominion
unless it is convincingly shown that the property
has become patrimonial. This, the respondents
have failed to do.
As property of public dominion, the Roppongi lot is
outside the commerce of man. It cannot be
alienated. Its ownership is a special collective
ownership for general use and enjoyment, an
application to the satisfaction of collective needs,
and resides in the social group. The purpose is not
to serve the State as a juridical person, but the
citizens; it is intended for the common and public
welfare and cannot be the object of appropration.
(Taken from 3 Manresa, 66-69; cited in Tolentino,
Commentaries on the Civil Code of the Philippines,
1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of
public dominion or of private
ownership.
ART. 420. The following things are
property of public dominion
(1) Those intended for public use,
such as roads, canals, rivers,
torrents, ports and bridges
constructed by the State, banks
shores roadsteads, and others of
similar character;
(2) Those which belong to the
State, without being for public use,
and are intended for some public
service or for the development of
the national wealth.
ART. 421. All other property of the
State, which is not of the character
stated in the preceding article, is
patrimonial property.
The Roppongi property is correctly classified
under paragraph 2 of Article 420 of the Civil Code
as property belonging to the State and intended
for some public service.
Has the intention of the government regarding the
use of the property been changed because the lot
has been Idle for some years? Has it become
patrimonial?
The fact that the Roppongi site has not been used
for a long time for actual Embassy service does not
automatically convert it to patrimonial property.
Any such conversion happens only if the property
is withdrawn from public use (Cebu Oxygen and
Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A
property continues to be part of the public
domain, not available for private appropriation or
ownership until there is a formal declaration on
the part of the government to withdraw it from
being such (Ignacio v. Director of Lands, 108 Phil.
335 [1960]).
218
The respondents enumerate various
pronouncements by concerned public officials
insinuating a change of intention. We emphasize,
however, that an abandonment of the intention to
use the Roppongi property for public service and
to make it patrimonial property under Article 422
of the Civil Code must be definiteAbandonment
cannot be inferred from the non-use alone
specially if the non-use was attributable not to the
government's own deliberate and indubitable will
but to a lack of financial support to repair and
improve the property (See Heirs of Felino Santiago
v. Lazaro, 166 SCRA 368 [1988]). Abandonment
must be a certain and positive act based on correct
legal premises.
A mere transfer of the Philippine Embassy to
Nampeidai in 1976 is not relinquishment of the
Roppongi property's original purpose. Even the
failure by the government to repair the building in
Roppongi is not abandonment since as earlier
stated, there simply was a shortage of government
funds. The recent Administrative Orders
authorizing a study of the status and conditions of
government properties in Japan were merely
directives for investigation but did not in any way
signify a clear intention to dispose of the
properties.
Executive Order No. 296, though its title declares
an "authority to sell", does not have a provision in
its text expressly authorizing the sale of the four
properties procured from Japan for the
government sector. The executive order does not
declare that the properties lost their public
character. It merely intends to make the
properties available to foreigners and not to
Filipinos alone in case of a sale, lease or other
disposition. It merely eliminates the restriction
under Rep. Act No. 1789 that reparations goods
may be sold only to Filipino citizens and one
hundred (100%) percent Filipino-owned entities.
The text of Executive Order No. 296 provides:
Section 1. The provisions of
Republic Act No. 1789, as
amended, and of other laws to the
contrary notwithstanding, the
above-mentioned properties can
be made available for sale, lease or
any other manner of disposition to
non-Filipino citizens or to entities
owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong
premise or assumption that the Roppongi and the
three other properties were earlier converted into
alienable real properties. As earlier stated, Rep.
Act No. 1789 differentiates the procurements for
the government sector and the private sector
(Sections 2 and 12, Rep. Act No. 1789). Only the
private sector properties can be sold to end-users
who must be Filipinos or entities owned by
Filipinos. It is this nationality provision which was
amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law)
which provides as one of the sources of funds for
its implementation, the proceeds of the disposition
of the properties of the Government in foreign
countries, did not withdraw the Roppongi
property from being classified as one of public
dominion when it mentions Philippine properties
abroad. Section 63 (c) refers to properties which
are alienable and not to those reserved for public
use or service. Rep Act No. 6657, therefore, does
not authorize the Executive Department to sell the
Roppongi property. It merely enumerates possible
sources of future funding to augment (as and when
needed) the Agrarian Reform Fund created under
Executive Order No. 299. Obviously any property
outside of the commerce of man cannot be tapped
as a source of funds.
The respondents try to get around the public
dominion character of the Roppongi property by
insisting that Japanese law and not our Civil Code
should apply.
It is exceedingly strange why our top government
officials, of all people, should be the ones to insist
that in the sale of extremely valuable government
property, Japanese law and not Philippine law
should prevail. The Japanese law - its coverage and
effects, when enacted, and exceptions to its
provision — is not presented to the Court It is
simply asserted that the lex loci rei sitae or
Japanese law should apply without stating what
that law provides. It is a ed on faith that Japanese
law would allow the sale.
We see no reason why a conflict of law rule should
apply when no conflict of law situation exists. A
conflict of law situation arises only when: (1)
There is a dispute over the title or ownership of an
immovable, such that the capacity to take and
transfer immovables, the formalities of
conveyance, the essential validity and effect of the
transfer, or the interpretation and effect of a
conveyance, are to be determined (See
Salonga, Private International Law, 1981 ed., pp.
377-383); and (2) A foreign law on land ownership
and its conveyance is asserted to conflict with a
domestic law on the same matters. Hence, the need
to determine which law should apply.
In the instant case, none of the above elements
exists.
The issues are not concerned with validity of
ownership or title. There is no question that the
property belongs to the Philippines. The issue is
the authority of the respondent officials to validly
dispose of property belonging to the State. And the
validity of the procedures adopted to effect its sale.
This is governed by Philippine Law. The rule of lex
situs does not apply.
The assertion that the opinion of the Secretary of
Justice sheds light on the relevance of the lex
situs rule is misplaced. The opinion does not tackle
the alienability of the real properties procured
through reparations nor the existence in what
body of the authority to sell them. In discussing
who are capable of acquiring the lots, the Secretary
merely explains that it is the foreign law which
should determine who can acquire the
properties so that the constitutional limitation on
219
acquisition of lands of the public domain to
Filipino citizens and entities wholly owned by
Filipinos is inapplicable. We see no point in
belaboring whether or not this opinion is correct.
Why should we discuss who can acquire the
Roppongi lot when there is no showing that it can
be sold?
The subsequent approval on October 4, 1988 by
President Aquino of the recommendation by the
investigating committee to sell the Roppongi
property was premature or, at the very least,
conditioned on a valid change in the public
character of the Roppongi property. Moreover, the
approval does not have the force and effect of law
since the President already lost her legislative
powers. The Congress had already convened for
more than a year.
Assuming for the sake of argument, however, that
the Roppongi property is no longer of public
dominion, there is another obstacle to its sale by
the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code
of 1917 provides
Section 79 (f ) Conveyances and
contracts to which the Government
is a party. — In cases in which the
Government of the Republic of the
Philippines is a party to any deed
or other instrument conveying the
title to real estate or to any other
property the value of which is in
excess of one hundred thousand
pesos, the respective Department
Secretary shall prepare the
necessary papers which, together
with the proper
recommendations, shall be
submitted to the Congress of the
Philippines for approval by the
same. Such deed, instrument, or
contract shall be executed and
signed by the President of the
Philippines on behalf of the
Government of the Philippines
unless the Government of the
Philippines unless the authority
therefor be expressly vested by
law in another officer. (Emphasis
supplied)
The requirement has been retained in Section 48,
Book I of the Administrative Code of 1987
(Executive Order No. 292).
SEC. 48. Official Authorized to
Convey Real Property. — Whenever
real property of the Government
is authorized by law to be
conveyed, the deed of conveyance
shall be executed in behalf of the
government by the following:
(1) For property belonging to and
titled in the name of the Republic
of the Philippines, by the
President, unless the authority
therefor is expressly vested by law
in another officer.
(2) For property belonging to the
Republic of the Philippines but
titled in the name of any political
subdivision or of any corporate
agency or instrumentality, by the
executive head of the agency or
instrumentality. (Emphasis
supplied)
It is not for the President to convey valuable real
property of the government on his or her own sole
will. Any such conveyance must be authorized and
approved by a law enacted by the Congress. It
requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989,
asking for the deferment of the sale of the
Roppongi property does not withdraw the
property from public domain much less authorize
its sale. It is a mere resolution; it is not a formal
declaration abandoning the public character of the
Roppongi property. In fact, the Senate Committee
on Foreign Relations is conducting hearings on
Senate Resolution No. 734 which raises serious
policy considerations and calls for a fact-finding
investigation of the circumstances behind the
decision to sell the Philippine government
properties in Japan.
The resolution of this Court in Ojeda v. Bidding
Committee, et al., supra, did not pass upon the
constitutionality of Executive Order No. 296.
Contrary to respondents' assertion, we did not
uphold the authority of the President to sell the
Roppongi property. The Court stated that the
constitutionality of the executive order was not
the real issue and that resolving the constitutional
question was "neither necessary nor finally
determinative of the case." The Court noted that
"[W]hat petitioner ultimately questions is the use
of the proceeds of the disposition of the Roppongi
property." In emphasizing that "the decision of the
Executive to dispose of the Roppongi property to
finance the CARP ... cannot be questioned" in view
of Section 63 (c) of Rep. Act No. 6657, the Court did
not acknowledge the fact that the property became
alienable nor did it indicate that the President was
authorized to dispose of the Roppongi property.
The resolution should be read to mean that in case
the Roppongi property is re-classified to be
patrimonial and alienable by authority of law, the
proceeds of a sale may be used for national
economic development projects including the
CARP.
Moreover, the sale in 1989 did not materialize.
The petitions before us question the proposed
1990 sale of the Roppongi property. We are
resolving the issues raised in these petitions, not
the issues raised in 1989.
220
Having declared a need for a law or formal
declaration to withdraw the Roppongi property
from public domain to make it alienable and a
need for legislative authority to allow the sale of
the property, we see no compelling reason to
tackle the constitutional issues raised by
petitioner Ojeda.
The Court does not ordinarily pass upon
constitutional questions unless these questions
are properly raised in appropriate cases and their
resolution is necessary for the determination of
the case (People v. Vera, 65 Phil. 56 [1937]). The
Court will not pass upon a constitutional question
although properly presented by the record if the
case can be disposed of on some other ground such
as the application of a statute or general law (Siler
v. Louisville and Nashville R. Co., 213 U.S. 175,
[1909], Railroad Commission v. Pullman Co., 312
U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the
Roppongi property should not be sold:
The Roppongi property is not just
like any piece of property. It was
given to the Filipino people in
reparation for the lives and blood
of Filipinos who died and suffered
during the Japanese military
occupation, for the suffering of
widows and orphans who lost their
loved ones and kindred, for the
homes and other properties lost by
countless Filipinos during the war.
The Tokyo properties are a
monument to the bravery and
sacrifice of the Filipino people in
the face of an invader; like the
monuments of Rizal, Quezon, and
other Filipino heroes, we do not
expect economic or financial
benefits from them. But who would
think of selling these monuments?
Filipino honor and national dignity
dictate that we keep our
properties in Japan as memorials
to the countless Filipinos who died
and suffered. Even if we should
become paupers we should not
think of selling them. For it would
be as if we sold the lives and blood
and tears of our countrymen.
(Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property.
It is one ceded by the Japanese
government in atonement for its
past belligerence for the valiant
sacrifice of life and limb and for
deaths, physical dislocation and
economic devastation the whole
Filipino people endured in World
War II.
It is for what it stands for, and for
what it could never bring back to
life, that its significance today
remains undimmed, inspire of the
lapse of 45 years since the war
ended, inspire of the passage of 32
years since the property passed on
to the Philippine government.
Roppongi is a reminder that
cannot — should not — be
dissipated ... (Rollo-92047, p. 9)
It is indeed true that the Roppongi property is
valuable not so much because of the inflated prices
fetched by real property in Tokyo but more so
because of its symbolic value to all Filipinos —
veterans and civilians alike. Whether or not the
Roppongi and related properties will eventually be
sold is a policy determination where both the
President and Congress must concur. Considering
the properties' importance and value, the laws on
conversion and disposition of property of public
dominion must be faithfully followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the
petitions are GRANTED. A writ of prohibition is
issued enjoining the respondents from proceeding
with the sale of the Roppongi property in Tokyo,
Japan. The February 20, 1990 Temporary
Restraining Order is made PERMANENT.
SO ORDERED.
Melencio-Herrera, Paras, Bidin, Griño-Aquino and
Regalado, JJ., concur.
Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of
Mr. Justice Gutierrez and will add the following
observations only for emphasis.
It is clear that the respondents have failed to show
the President's legal authority to sell the Roppongi
property. When asked to do so at the hearing on
these petitions, the Solicitor General was at best
ambiguous, although I must add in fairness that
this was not his fault. The fact is that there is -no
such authority. Legal expertise alone cannot
conjure that statutory permission out of thin air.
Exec. Order No. 296, which reads like so much
legislative, double talk, does not contain such
authority. Neither does Rep. Act No. 6657, which
simply allows the proceeds of the sale of our
properties abroad to be used for the
comprehensive agrarian reform program. Senate
Res. No. 55 was a mere request for the deferment
of the scheduled sale of tile Roppongi property,
possibly to stop the transaction altogether; and ill
any case it is not a law. The sale of the said
221
property may be authorized only by Congress property to state patrimonial property involves, to
through a duly enacted statute, and there is no my mind, a policy decision. It is a policy decision
such law. because the treatment of the property varies
according to its classification. Consequently, it is
Once again, we have affirmed the principle that Congress which can decide and declare the
ours is a government of laws and not of men, conversion of Roppongi from a public dominion
where every public official, from the lowest to the property to a state patrimonial property. Congress
highest, can act only by virtue of a valid has made no such decision or declaration.
authorization. I am happy to note that in the
several cases where this Court has ruled against Moreover, the sale of public property (once
her, the President of the Philippines has submitted converted from public dominion to state
to this principle with becoming grace. patrimonial property) must be approved by
Congress, for this again is a matter of policy (i.e. to
keep or dispose of the property). Sec. 48, Book 1 of
the Administrative Code of 1987 provides:
PADILLA, J., concurring:
SEC. 48. Official Authorized to
I concur in the decision penned by Mr. Justice Convey Real Property. — Whenever
Gutierrez, Jr., I only wish to make a few real property of the Government is
observations which could help in further clarifying authorized by law to be conveyed,
the issues. the deed of conveyance shall be
executed in behalf of the
government by the following:
Under our tripartite system of government
ordained by the Constitution, it is Congress that
lays down or determines policies. The President (1) For property
executes such policies. The policies determined by belonging to and
Congress are embodied in legislative enactments titled in the name
that have to be approved by the President to of the Republic of
become law. The President, of course, the Philippines, by
recommends to Congress the approval of policies the President,
but, in the final analysis, it is Congress that is the unless the
policy - determining branch of government. authority therefor
is expressly vested
by law in another
The judiciary interprets the laws and, in officer.
appropriate cases, determines whether the laws
enacted by Congress and approved by the
President, and presidential acts implementing (2) For property
such laws, are in accordance with the Constitution. belonging to the
Republic of the
Philippines but
The Roppongi property was acquired by the titled in the name
Philippine government pursuant to the of any political
reparations agreement between the Philippine subdivision or of
and Japanese governments. Under such any corporate
agreement, this property was acquired by the agency or
Philippine government for a specific purpose, instrumentality, by
namely, to serve as the site of the Philippine the executive head
Embassy in Tokyo, Japan. Consequently, Roppongi of the agency or
is a property of public dominion and intended for instrumentality.
public service, squarely falling within that class of (Emphasis
property under Art. 420 of the Civil Code, which supplied)
provides:
But the record is bare of any congressional
Art. 420. The following things are decision or approval to sell Roppongi. The record
property of public dominion : is likewise bare of any congressional authority
extended to the President to sell Roppongi thru
(1) ... public bidding or otherwise.

(2) Those which belong to the
State, without being for public use,
and are intended for some public
service or for the development of
the national wealth. (339a)
Public dominion property intended for public
service cannot be alienated unless the property is
first transformed into private property of the state
otherwise known as patrimonial property of the
state. 1 The transformation of public dominion
It is therefore, clear that the President cannot sell
or order the sale of Roppongi thru public bidding
or otherwise without a prior congressional
approval, first, converting Roppongi from a public
dominion property to a state patrimonial
property, and, second, authorizing the President to
sell the same.
ACCORDINGLY, my vote is to GRANT the petition
and to make PERMANENT the temporary
restraining order earlier issued by this Court.

222

SARMIENTO, J., concurring:
The central question, as I see it, is whether or not
the so-called "Roppongi property' has lost its
nature as property of public dominion, and hence,
has become patrimonial property of the State. I
understand that the parties are agreed that it was
property intended for "public service" within the
contemplation of paragraph (2), of Article 430, of
the Civil Code, and accordingly, land of State
dominion, and beyond human commerce. The lone
issue is, in the light of supervening developments,
that is non-user thereof by the National
Government (for diplomatic purposes) for the last
thirteen years; the issuance of Executive Order No.
296 making it available for sale to any interested
buyer; the promulgation of Republic Act No. 6657,
the Comprehensive Agrarian Reform Law, making
available for the program's financing, State assets
sold; the approval by the President of the
recommendation of the investigating committee
formed to study the property's utilization; and the
issuance of Resolution No. 55 of the Philippine
Senate requesting for the deferment of its
disposition it, "Roppongi", is still property of the
public dominion, and if it is not, how it lost that
character.
When land of the public dominion ceases to be
one, or when the change takes place, is a question
our courts have debated early. In a 1906
decision, 1 it was held that property of the public
dominion, a public plaza in this instance, becomes
patrimonial upon use thereof for purposes other
than a plaza. In a later case, 2 this ruling was
reiterated. Likewise, it has been held that land,
originally private property, has become of public
dominion upon its donation to the town and its
conversion and use as a public plaza. 3 It is notable
that under these three cases, the character of the
property, and any change occurring therein, depends
on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a
formal declaration on the part of the Government,
through the executive department or the Legislative,
to the effect that the land . . . is no longer needed for
[public] service- for public use or for special
industries, [it] continue[s] to be part of the public
[dominion], not available for private expropriation or
ownership." 5 So also, it was ruled that a political
subdivision (the City of Cebu in this case) alone may
declare (under its charter) a city road abandoned and
thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal
declaration to withdraw the Roppongi property from
public domain to make it alienable and a land for
legislative authority to allow the sale of the
property" 7 the majority lays stress to the fact that: (1)
An affirmative act — executive or legislative — is
necessary to reclassify property of the public
dominion, and (2) a legislative decree is required to
make it alienable. It also clears the uncertainties
brought about by earlier interpretations that the
nature of property-whether public or patrimonial is
predicated on the manner it is actually used, or not
used, and in the same breath, repudiates the
Government's position that the continuous non-use of
"Roppongi", among other arguments, for "diplomatic
purposes", has turned it into State patrimonial
property.
I feel that this view corresponds to existing
pronouncements of this Court, among other things,
that: (1) Property is presumed to be State property in
the absence of any showing to the contrary; 8 (2) With
respect to forest lands, the same continue to be lands
of the public dominion unless and until reclassified by
the Executive Branch of the Government; 9 and (3) All
natural resources, under the Constitution, and subject
to exceptional cases, belong to the State. 10
I am elated that the Court has banished previous
uncertainties.
FELICIANO, J., dissenting
With regret, I find myself unable to share the
conclusions reached by Mr. Justice Hugo E. Gutierrez,
Jr.
For purposes of this separate opinion, I assume that
the piece of land located in 306 Roppongi, 5-Chome,
Minato-ku Tokyo, Japan (hereinafter referred to as the
"Roppongi property") may be characterized as
property of public dominion, within the meaning of
Article 420 (2) of the Civil Code:
[Property] which belong[s] to the
State, without being for public use,
and are intended for some public
service -.
It might not be amiss however, to note that the
appropriateness of trying to bring within the confines
of the simple threefold classification found in Article
420 of the Civil Code ("property for public use
property "intended for some public service" and
property intended "for the development of the
national wealth") all property owned by the Republic
of the Philippines whether found within the territorial
boundaries of the Republic or located within the
territory of another sovereign State, is not self-evident.
The first item of the classification property intended
for public use — can scarcely be properly applied to
property belonging to the Republic but found within
the territory of another State. The third item of the
classification property intended for the development
of the national wealth is illustrated, in Article 339 of
the Spanish Civil Code of 1889, by mines or mineral
properties. Again, mineral lands owned by a sovereign
State are rarely, if ever, found within the territorial
base of another sovereign State. The task of examining
in detail the applicability of the classification set out in
Article 420 of our Civil Code to property that the
Philippines happens to own outside its own
boundaries must, however, be left to academicians.
For present purposes, too, I agree that there is no
question of conflict of laws that is, at the present time,
before this Court. The issues before us relate
223
essentially to authority to sell the Roppongi
property so far as Philippine law is concerned.
The majority opinion raises two (2) issues: (a)
whether or not the Roppongi property has been
converted into patrimonial property or property of the
private domain of the State; and (b) assuming an
affirmative answer to (a), whether or not there is legal
authority to dispose of the Roppongi property.
I
Addressing the first issue of conversion of property of
public dominion intended for some public service, into
property of the private domain of the Republic, it
should be noted that the Civil Code does not address
the question of who has authority to effect such
conversion. Neither does the Civil Code set out or refer
to any procedure for such conversion.
Our case law, however, contains some fairly explicit
pronouncements on this point, as Justice Sarmiento
has pointed out in his concurring opinion. In Ignacio v.
Director of Lands (108 Phils. 335 [1960]), petitioner
Ignacio argued that if the land in question formed part
of the public domain, the trial court should have
declared the same no longer necessary for public use
or public purposes and which would, therefore, have
become disposable and available for private
ownership. Mr. Justice Montemayor, speaking for the
Court, said:
Article 4 of the Law of Waters of 1866
provides that when a portion of the
shore is no longer washed by the
waters of the sea and is not necessary
for purposes of public utility, or for
the establishment of special
industries, or for coast-guard service,
the government shall declare it to be
the property of the owners of the
estates adjacent thereto and as an
increment thereof. We believe
that only the executive and possibly
the legislative departments have the
authority and the power to make the
declaration that any land so gained by
the sea, is not necessary for purposes
of public utility, or for the
establishment of special industries, or
for coast-guard service. If no such
declaration has been made by said
departments, the lot in question forms
part of the public domain. (Natividad
v. Director of Lands, supra.)
The reason for this pronouncement,
according to this Tribunal in the case
of Vicente Joven y Monteverde v.
Director of Lands, 93 Phil., 134 (cited
in Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are
neither primarily called upon, nor
indeed in a position to determine
whether any public land are to be
used for the purposes specified in
Article 4 of the Law of Waters.
Consequently, until a formal
declaration on the part of the
Government, through the executive
department or the Legislature, to the
effect that the land in question is no
longer needed for coast-guard service,
for public use or for special industries,
they continue to be part of the public
domain not available for private
appropriation or ownership. (108 Phil.
at 338-339; emphasis supplied)
Thus, under Ignacio, either the Executive Department
or the Legislative Department may convert property of
the State of public dominion into patrimonial property
of the State. No particular formula or procedure of
conversion is specified either in statute law or in case
law. Article 422 of the Civil Code simply states that:
"Property of public dominion, when no longer intended
for public use or for public service, shall form part of
the patrimonial property of the State". I respectfully
submit, therefore, that the only requirement which is
legitimately imposable is that the intent to convert
must be reasonably clear from a consideration of the
acts or acts of the Executive Department or of the
Legislative Department which are said to have effected
such conversion.
The same legal situation exists in respect of
conversion of property of public dominion belonging
to municipal corporations, i.e., local governmental
units, into patrimonial property of such entities.
In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481
[1975]), the City Council of Cebu by resolution
declared a certain portion of an existing street as an
abandoned road, "the same not being included in the
city development plan". Subsequently, by another
resolution, the City Council of Cebu authorized the
acting City Mayor to sell the land through public
bidding. Although there was no formal and explicit
declaration of conversion of property for public use into
patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street
subject of petitioner's application for
registration of title was withdrawn
from public use, it follows that such
withdrawn portion becomes
patrimonial property which can be the
object of an ordinary contract.
Article 422 of the Civil Code expressly
provides that "Property of public
dominion, when no longer intended
for public use of for public service,
shall form part of the patrimonial
property of the State."
Besides, the Revised Charter of the
City of Cebu heretofore quoted, in
very clear and unequivocal terms,
states that "Property thus withdrawn
from public servitude may be used or
conveyed for any purpose for which
other real property belonging to the
City may be lawfully used or
conveyed."
224
 Accordingly, the withdrawal of the
property in question from public use
and its subsequent sale to the
petitioner is valid. Hence, the
petitioner has a registrable title over
the lot in question. (66 SCRA at 484-;
emphasis supplied)
Thus, again as pointed out by Sarmiento J., in his
separate opinion, in the case of property owned by
municipal corporations simple non-use or the actual
dedication of public property to some use other than
"public use" or some "public service", was sufficient
legally to convert such property into patrimonial
property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]-
Municipality of Hinunganan v. Director of Lands 24 Phil.
124 [1913]; Province of Zamboanga del Norte v. City of
Zamboanga, 22 SCRA 1334 (1968).
I would also add that such was the case not only in
respect of' property of municipal corporations but also
in respect of property of the State itself. Manresa in
commenting on Article 341 of the 1889 Spanish Civil
Code which has been carried over verbatim into our
Civil Code by Article 422 thereof, wrote:
La dificultad mayor en todo esto
estriba, naturalmente, en fijar el
momento en que los bienes de
dominio publico dejan de serlo. Si la
Administracion o la autoridad
competente legislative realizan qun
acto en virtud del cual cesa el destino
o uso publico de los bienes de que se
trata naturalmente la dificultad
queda desde el primer momento
resuelta. Hay un punto de partida
cierto para iniciar las relaciones
juridicas a que pudiera haber
lugar Pero puede ocurrir que no haya
taldeclaracion expresa, legislativa or
administrativa, y, sin embargo, cesar
de hecho el destino publico de los
bienes; ahora bien, en este caso, y para
los efectos juridicos que resultan de
entrar la cosa en el comercio de los
hombres,' se entedera que se ha
verificado la conversion de los bienes
patrimoniales?
El citado tratadista Ricci opina,
respecto del antiguo Codigo italiano,
por la afirmativa, y por nuestra parte
creemos que tal debe ser la soluciion.
El destino de las cosas no depende
tanto de una declaracion expresa
como del uso publico de las mismas, y
cuanda el uso publico cese con
respecto de determinados bienes,
cesa tambien su situacion en el
dominio publico. Si una fortaleza en
ruina se abandona y no se repara, si
un trozo de la via publica se
abandona tambien por constituir otro
nuevo an mejores
condiciones....ambos bienes cesan de
estar Codigo, y leyes especiales mas o
memos administrativas. (3 Manresa,
Comentarios al Codigo Civil Espanol,
p. 128 [7a ed.; 1952) (Emphasis
supplied)
The majority opinion says that none of the executive
acts pointed to by the Government purported,
expressly or definitely, to convert the Roppongi
property into patrimonial property — of the Republic.
Assuming that to be the case, it is respectfully
submitted that cumulative effect of the executive acts
here involved was to convert property originally
intended for and devoted to public service into
patrimonial property of the State, that is, property
susceptible of disposition to and appropration by
private persons. These executive acts, in their
totality if not each individual act, make crystal clear
the intent of the Executive Department to effect such
conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985,
which created a Committee to study the
disposition/utilization of the Government's property
in Japan, The Committee was composed of officials of
the Executive Department: the Executive Secretary;
the Philippine Ambassador to Japan; and
representatives of the Department of Foreign Affairs
and the Asset Privatization Trust. On 19 September
1988, the Committee recommended to the President
the sale of one of the lots (the lot specifically in
Roppongi) through public bidding. On 4 October 1988,
the President approved the recommendation of the
Committee.
On 14 December 1988, the Philippine Government by
diplomatic note informed the Japanese Ministry of
Foreign Affairs of the Republic's intention to dispose
of the property in Roppongi. The Japanese
Government through its Ministry of Foreign Affairs
replied that it interposed no objection to such
disposition by the Republic. Subsequently, the
President and the Committee informed the leaders of
the House of Representatives and of the Senate of the
Philippines of the proposed disposition of the
Roppongi property.
(b) Executive Order No. 296, which was issued by the
President on 25 July 1987. Assuming that the majority
opinion is right in saying that Executive Order No. 296
is insufficient to authorize the sale of the Roppongi
property, it is here submitted with respect that
Executive Order No. 296 is more than sufficient to
indicate an intention to convert the property previously
devoted to public service into patrimonial property
that is capable of being sold or otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years
for diplomatic or for any other public purposes.
Assuming (but only arguendo) that non-use does
not, by itself, automatically convert the property into
patrimonial property. I respectfully urge that
prolonged non-use, conjoined with the other factors
here listed, was legally effective to convert the lot in
Roppongi into patrimonial property of the State.
Actually, as already pointed out, case law involving
property of municipal corporations is to the effect that
simple non-use or the actual dedication of public
property to some use other than public use or public
service, was sufficient to convert such property into
patrimonial property of the local governmental entity
concerned. Also as pointed out above, Manresa
225
reached the same conclusion in respect of conversion
of property of the public domain of the State into
property of the private domain of the State.
The majority opinion states that "abandonment cannot
be inferred from the non-use alone especially if the
non-use was attributable not to the Government's own
deliberate and indubitable will but to lack of financial
support to repair and improve the property" (Majority
Opinion, p. 13). With respect, it may be stressed that
there is no abandonment involved here, certainly no
abandonment of property or of property rights. What
is involved is the charge of the classification of the
property from property of the public domain into
property of the private domain of the State. Moreover,
if for fourteen (14) years, the Government did not see
fit to appropriate whatever funds were necessary to
maintain the property in Roppongi in a condition
suitable for diplomatic representation purposes, such
circumstance may, with equal logic, be construed as a
manifestation of the crystalizing intent to change the
character of the property.
(d) On 30 March 1989, a public bidding was in fact
held by the Executive Department for the sale of the
lot in Roppongi. The circumstance that this bidding
was not successful certainly does not argue against an
intent to convert the property involved into property
that is disposable by bidding.
The above set of events and circumstances makes no
sense at all if it does not, as a whole, show at least the
intent on the part of the Executive Department (with
the knowledge of the Legislative Department) to
convert the property involved into patrimonial
property that is susceptible of being sold.
II
Having reached an affirmative answer in respect of the
first issue, it is necessary to address the second issue
of whether or not there exists legal authority for the
sale or disposition of the Roppongi property.
The majority opinion refers to Section 79(f) of the
Revised Administrative Code of 1917 which reads as
follows:
SEC. 79 (f). Conveyances and contracts
to which the Government is a party. —
In cases in which the Government of
the Republic of the Philippines is a
party to any deed or other
instrument conveying the title to real
estate or to any other property the
value of which is in excess of one
hundred thousand pesos, the
respective Department Secretary
shall prepare the necessary papers
which, together with the proper
recommendations, shall be submitted
to the Congress of the Philippines for
approval by the same. Such deed,
instrument, or contract shall be
executed and signed by the President
of the Philippines on behalf of the
Government of the Philippines unless
the authority therefor be expressly
vested by law in another officer.
(Emphasis supplied)
The majority opinion then goes on to state that: "[T]he
requirement has been retained in Section 4, Book I of
the Administrative Code of 1987 (Executive Order No.
292)" which reads:
SEC. 48. Official Authorized to Convey
Real Property. — Whenever real
property of the Government
is authorized by law to be conveyed,
the deed of conveyance shall be
executed in behalf of the government
by the following:
(1) For property belonging to and
titled in the name of the Republic of
the Philippines, by the President,
unless the authority therefor is
expressly vested by law in another
officer.
(2) For property belonging to the
Republic of the Philippines but titled
in the name of any political
subdivision or of any corporate
agency or instrumentality, by the
executive head of the agency or
instrumentality. (Emphasis supplied)
Two points need to be made in this connection.
Firstly, the requirement of obtaining specific
approval of Congress when the price of the real
property being disposed of is in excess of One Hundred
Thousand Pesos (P100,000.00) under the Revised
Administrative Code of 1917, has been deleted from
Section 48 of the 1987 Administrative Code. What
Section 48 of the present Administrative Code refers
to is authorization by law for the conveyance. Section
48 does not purport to be itself a source of legal
authority for conveyance of real property of the
Government. For Section 48 merely specifies the
official authorized to execute and sign on behalf of the
Government the deed of conveyance in case of such a
conveyance.
Secondly, examination of our statute books shows that
authorization by law for disposition of real property of
the private domain of the Government, has been
granted by Congress both in the form of (a) a general,
standing authorization for disposition of patrimonial
property of the Government; and (b) specific
legislation authorizing the disposition of particular
pieces of the Government's patrimonial property.
Standing legislative authority for the disposition of
land of the private domain of the Philippines is
provided by Act No. 3038, entitled "An Act Authorizing
the Secretary of Agriculture and Natural Resources to
Sell or Lease Land of the Private Domain of the
Government of the Philippine Islands (now Republic of
the Philippines)", enacted on 9 March 1922. The full
text of this statute is as follows:
Be it enacted by the Senate and House
of Representatives of the Philippines
in Legislature assembled and by the
authority of the same:
226
 SECTION 1. The Secretary of
Agriculture and Natural Resources
(now Secretary of the Environment
and Natural Resources) is hereby
authorized to sell or lease land of the
private domain of the Government of
the Philippine Islands, or any part
thereof, to such persons, corporations
or associations as are, under the
provisions of Act Numbered Twenty-
eight hundred and seventy-four, (now
Commonwealth Act No. 141, as
amended) known as the Public Land
Act, entitled to apply for the purchase
or lease or agricultural public land.
SECTION 2. The sale of the land
referred to in the preceding
section shall, if such land is
agricultural, be made in the manner
and subject to the limitations
prescribed in chapters five and six,
respectively, of said Public Land Act,
and if it be classified differently, in
conformity with the provisions of
chapter nine of said Act: Provided,
however, That the land necessary for
the public service shall be exempt
from the provisions of this Act.
SECTION 3. This Act shall take effect
on its approval.
Approved, March 9, 1922. (Emphasis
supplied)
Lest it be assumed that Act No. 3038 refers only to
agricultural lands of the private domain of the State, it
must be noted that Chapter 9 of the old Public Land
Act (Act No. 2874) is now Chapter 9 of the present
Public Land Act (Commonwealth Act No. 141, as
amended) and that both statutes refer to: "any tract of
land of the public domain which being neither timber
nor mineral land, is intended to be used for residential
purposes or for commercial or industrial purposes other
than agricultural" (Emphasis supplied).i•t•c-aüsl In
other words, the statute covers the sale or lease or
residential, commercial or industrial land of the
private domain of the State.
Implementing regulations have been issued for the
carrying out of the provisions of Act No. 3038. On 21
December 1954, the then Secretary of Agriculture and
Natural Resources promulgated Lands Administrative
Orders Nos. 7-6 and 7-7 which were entitled,
respectively: "Supplementary Regulations Governing
the Sale of the Lands of the Private Domain of the
Republic of the Philippines"; and "Supplementary
Regulations Governing the Lease of Lands of Private
Domain of the Republic of the Philippines" (text in 51
O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although
now sixty-eight (68) years old, is still in effect and has
not been repealed. 1
Specific legislative authorization for disposition of
particular patrimonial properties of the State is
illustrated by certain earlier statutes. The first of these
was Act No. 1120, enacted on 26 April 1904, which
provided for the disposition of the friar lands,
purchased by the Government from the Roman
Catholic Church, to bona fide settlers and occupants
thereof or to other persons. In Jacinto v. Director of
Lands (49 Phil. 853 [1926]), these friar lands were
held to be private and patrimonial properties of the
State. Act No. 2360, enacted on -28 February 1914,
authorized the sale of the San Lazaro Estate located in
the City of Manila, which had also been purchased by
the Government from the Roman Catholic Church. In
January 1916, Act No. 2555 amended Act No. 2360 by
including therein all lands and buildings owned by the
Hospital and the Foundation of San Lazaro theretofor
leased by private persons, and which were also
acquired by the Philippine Government.
After the enactment in 1922 of Act No. 3038, there
appears, to my knowledge, to be only one statute
authorizing the President to dispose of a specific piece
of property. This statute is Republic Act No. 905,
enacted on 20 June 1953, which authorized the
President to sell an Identified parcel of land of the
private domain of the National Government to the
National Press Club of the Philippines, and to other
recognized national associations of professionals with
academic standing, for the nominal price of P1.00. It
appears relevant to note that Republic Act No. 905 was
not an outright disposition in perpetuity of the
property involved- it provided for reversion of the
property to the National Government in case the
National Press Club stopped using it for its
headquarters. What Republic Act No. 905 authorized
was really a donation, and not a sale.
The basic submission here made is that Act No. 3038
provides standing legislative authorization for
disposition of the Roppongi property which, in my
view, has been converted into patrimonial property of
the Republic. 2
To some, the submission that Act No. 3038 applies not
only to lands of the private domain of the State located
in the Philippines but also to patrimonial property
found outside the Philippines, may appear strange or
unusual. I respectfully submit that such position is not
any more unusual or strange than the assumption that
Article 420 of the Civil Code applies not only to
property of the Republic located within Philippine
territory but also to property found outside the
boundaries of the Republic.
It remains to note that under the well-settled doctrine
that heads of Executive Departments are alter egos of
the President (Villena v. Secretary of the Interior, 67
Phil. 451 [1939]), and in view of the constitutional
power of control exercised by the President over
department heads (Article VII, Section 17,1987
Constitution), the President herself may carry out the
function or duty that is specifically lodged in the
Secretary of the Department of Environment and
Natural Resources (Araneta v. Gatmaitan 101 Phil. 328
[1957]). At the very least, the President retains the
power to approve or disapprove the exercise of that
function or duty when done by the Secretary of
Environment and Natural Resources.
227
It is hardly necessary to add that the foregoing
analyses and submissions relate only to the austere
question of existence of legal power or authority. They
have nothing to do with much debated questions of
wisdom or propriety or relative desirability either of
the proposed disposition itself or of the proposed
utilization of the anticipated proceeds of the property
involved. These latter types of considerations He
within the sphere of responsibility of the political
departments of government the Executive and the
Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for
Prohibition in both G.R. Nos. 92013 and 92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea,
JJ., concurring.
Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of Mr.
Justice Gutierrez and will add the following
observations only for emphasis.
It is clear that the respondents have failed to show the
President's legal authority to sell the Roppongi
property. When asked to do so at the hearing on these
petitions, the Solicitor General was at best ambiguous,
although I must add in fairness that this was not his
fault. The fact is that there is -no such authority. Legal
expertise alone cannot conjure that statutory
permission out of thin air.
Exec. Order No. 296, which reads like so much
legislative, double talk, does not contain such
authority. Neither does Rep. Act No. 6657, which
simply allows the proceeds of the sale of our
properties abroad to be used for the comprehensive
agrarian reform program. Senate Res. No. 55 was a
mere request for the deferment of the scheduled sale
of tile Roppongi property, possibly to stop the
transaction altogether; and ill any case it is not a law.
The sale of the said property may be authorized only
by Congress through a duly enacted statute, and there
is no such law.
Once again, we have affirmed the principle that ours is
a government of laws and not of men, where every
public official, from the lowest to the highest, can act
only by virtue of a valid authorization. I am happy to
note that in the several cases where this Court has
ruled against her, the President of the Philippines has
submitted to this principle with becoming grace.
PADILLA, J., concurring:
I concur in the decision penned by Mr. Justice
Gutierrez, Jr., I only wish to make a few observations
which could help in further clarifying the issues.
Under our tripartite system of government ordained
by the Constitution, it is Congress that lays down or
determines policies. The President executes such
policies. The policies determined by Congress are
embodied in legislative enactments that have to be
approved by the President to become law. The
President, of course, recommends to Congress the
approval of policies but, in the final analysis, it is
Congress that is the policy - determining branch of
government.
The judiciary interprets the laws and, in appropriate
cases, determines whether the laws enacted by
Congress and approved by the President, and
presidential acts implementing such laws, are in
accordance with the Constitution.
The Roppongi property was acquired by the Philippine
government pursuant to the reparations agreement
between the Philippine and Japanese governments.
Under such agreement, this property was acquired by
the Philippine government for a specific purpose,
namely, to serve as the site of the Philippine Embassy
in Tokyo, Japan. Consequently, Roppongi is a property
of public dominion and intended for public service,
squarely falling within that class of property under
Art. 420 of the Civil Code, which provides:
Art. 420. The following things are
property of public dominion :
(1) ...
(2) Those which belong to the State,
without being for public use, and are
intended for some public service or
for the development of the national
wealth. (339a)
Public dominion property intended for public service
cannot be alienated unless the property is first
transformed into private property of the state
otherwise known as patrimonial property of the
state. 1 The transformation of public dominion
property to state patrimonial property involves, to my
mind, a policy decision. It is a policy decision because
the treatment of the property varies according to its
classification. Consequently, it is Congress which can
decide and declare the conversion of Roppongi from a
public dominion property to a state patrimonial
property. Congress has made no such decision or
declaration.
Moreover, the sale of public property (once converted
from public dominion to state patrimonial property)
must be approved by Congress, for this again is a
matter of policy (i.e. to keep or dispose of the
property). Sec. 48, Book 1 of the Administrative Code
of 1987 provides:
SEC. 48. Official Authorized to Convey
Real Property. — Whenever real
property of the Government is
authorized by law to be conveyed, the
deed of conveyance shall be executed
in behalf of the government by the
following:
228
 (1) For property
belonging to and
titled in the name of
the Republic of the
Philippines, by the
President, unless the
authority therefor is
expressly vested by
law in another
officer.
(2) For property
belonging to the
Republic of the
Philippines but titled
in the name of any
political subdivision
or of any corporate
agency or
instrumentality, by
the executive head
of the agency or
instrumentality.
(Emphasis supplied)
But the record is bare of any congressional decision or
approval to sell Roppongi. The record is likewise bare
of any congressional authority extended to the
President to sell Roppongi thru public bidding or
otherwise.
It is therefore, clear that the President cannot sell or
order the sale of Roppongi thru public bidding or
otherwise without a prior congressional approval,
first, converting Roppongi from a public dominion
property to a state patrimonial property, and, second,
authorizing the President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and
to make PERMANENT the temporary restraining order
earlier issued by this Court.
SARMIENTO, J., concurring:
The central question, as I see it, is whether or not the
so-called "Roppongi property' has lost its nature as
property of public dominion, and hence, has become
patrimonial property of the State. I understand that
the parties are agreed that it was property intended
for "public service" within the contemplation of
paragraph (2), of Article 430, of the Civil Code, and
accordingly, land of State dominion, and beyond
human commerce. The lone issue is, in the light of
supervening developments, that is non-user thereof by
the National Government (for diplomatic purposes)
for the last thirteen years; the issuance of Executive
Order No. 296 making it available for sale to any
interested buyer; the promulgation of Republic Act No.
6657, the Comprehensive Agrarian Reform Law,
making available for the program's financing, State
assets sold; the approval by the President of the
recommendation of the investigating committee
formed to study the property's utilization; and the
issuance of Resolution No. 55 of the Philippine Senate
requesting for the deferment of its disposition it,
"Roppongi", is still property of the public dominion,
and if it is not, how it lost that character.
When land of the public dominion ceases to be one, or
when the change takes place, is a question our courts
have debated early. In a 1906 decision, 1 it was held
that property of the public dominion, a public plaza in
this instance, becomes patrimonial upon use thereof
for purposes other than a plaza. In a later case, 2 this
ruling was reiterated. Likewise, it has been held that
land, originally private property, has become of public
dominion upon its donation to the town and its
conversion and use as a public plaza. 3 It is notable
that under these three cases, the character of the
property, and any change occurring therein, depends
on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a
formal declaration on the part of the Government,
through the executive department or the Legislative,
to the effect that the land . . . is no longer needed for
[public] service- for public use or for special
industries, [it] continue[s] to be part of the public
[dominion], not available for private expropriation or
ownership." 5 So also, it was ruled that a political
subdivision (the City of Cebu in this case) alone may
declare (under its charter) a city road abandoned and
thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal
declaration to withdraw the Roppongi property from
public domain to make it alienable and a land for
legislative authority to allow the sale of the
property" 7 the majority lays stress to the fact that: (1)
An affirmative act — executive or legislative — is
necessary to reclassify property of the public
dominion, and (2) a legislative decree is required to
make it alienable. It also clears the uncertainties
brought about by earlier interpretations that the
nature of property-whether public or patrimonial is
predicated on the manner it is actually used, or not
used, and in the same breath, repudiates the
Government's position that the continuous non-use of
"Roppongi", among other arguments, for "diplomatic
purposes", has turned it into State patrimonial
property.
I feel that this view corresponds to existing
pronouncements of this Court, among other things,
that: (1) Property is presumed to be State property in
the absence of any showing to the contrary; 8 (2) With
respect to forest lands, the same continue to be lands
of the public dominion unless and until reclassified by
the Executive Branch of the Government; 9 and (3) All
natural resources, under the Constitution, and subject
to exceptional cases, belong to the State. 10
I am elated that the Court has banished previous
uncertainties.
FELICIANO, J., dissenting
With regret, I find myself unable to share the
conclusions reached by Mr. Justice Hugo E. Gutierrez,
Jr.
For purposes of this separate opinion, I assume that
the piece of land located in 306 Roppongi, 5-Chome,
Minato-ku Tokyo, Japan (hereinafter referred to as the
"Roppongi property") may be characterized as
229
property of public dominion, within the meaning of
Article 420 (2) of the Civil Code:
[Property] which belong[s] to the
State, without being for public use,
and are intended for some public
service -.
It might not be amiss however, to note that the
appropriateness of trying to bring within the confines
of the simple threefold classification found in Article
420 of the Civil Code ("property for public use
property "intended for some public service" and
property intended "for the development of the
national wealth") all property owned by the Republic
of the Philippines whether found within the territorial
boundaries of the Republic or located within the
territory of another sovereign State, is not self-evident.
The first item of the classification property intended
for public use — can scarcely be properly applied to
property belonging to the Republic but found within
the territory of another State. The third item of the
classification property intended for the development
of the national wealth is illustrated, in Article 339 of
the Spanish Civil Code of 1889, by mines or mineral
properties. Again, mineral lands owned by a sovereign
State are rarely, if ever, found within the territorial
base of another sovereign State. The task of examining
in detail the applicability of the classification set out in
Article 420 of our Civil Code to property that the
Philippines happens to own outside its own
boundaries must, however, be left to academicians.
For present purposes, too, I agree that there is no
question of conflict of laws that is, at the present time,
before this Court. The issues before us relate
essentially to authority to sell the Roppongi
property so far as Philippine law is concerned.
The majority opinion raises two (2) issues: (a)
whether or not the Roppongi property has been
converted into patrimonial property or property of the
private domain of the State; and (b) assuming an
affirmative answer to (a), whether or not there is legal
authority to dispose of the Roppongi property.
I
Addressing the first issue of conversion of property of
public dominion intended for some public service, into
property of the private domain of the Republic, it
should be noted that the Civil Code does not address
the question of who has authority to effect such
conversion. Neither does the Civil Code set out or refer
to any procedure for such conversion.
Our case law, however, contains some fairly explicit
pronouncements on this point, as Justice Sarmiento
has pointed out in his concurring opinion. In Ignacio v.
Director of Lands (108 Phils. 335 [1960]), petitioner
Ignacio argued that if the land in question formed part
of the public domain, the trial court should have
declared the same no longer necessary for public use
or public purposes and which would, therefore, have
become disposable and available for private
ownership. Mr. Justice Montemayor, speaking for the
Court, said:
Article 4 of the Law of Waters of 1866
provides that when a portion of the
shore is no longer washed by the
waters of the sea and is not necessary
for purposes of public utility, or for
the establishment of special
industries, or for coast-guard service,
the government shall declare it to be
the property of the owners of the
estates adjacent thereto and as an
increment thereof. We believe
that only the executive and possibly
the legislative departments have the
authority and the power to make the
declaration that any land so gained by
the sea, is not necessary for purposes
of public utility, or for the
establishment of special industries, or
for coast-guard service. If no such
declaration has been made by said
departments, the lot in question forms
part of the public domain. (Natividad
v. Director of Lands, supra.)
The reason for this pronouncement,
according to this Tribunal in the case
of Vicente Joven y Monteverde v.
Director of Lands, 93 Phil., 134 (cited
in Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are
neither primarily called upon, nor
indeed in a position to determine
whether any public land are to be
used for the purposes specified in
Article 4 of the Law of Waters.
Consequently, until a formal
declaration on the part of the
Government, through the executive
department or the Legislature, to the
effect that the land in question is no
longer needed for coast-guard service,
for public use or for special industries,
they continue to be part of the public
domain not available for private
appropriation or ownership. (108 Phil.
at 338-339; emphasis supplied)
Thus, under Ignacio, either the Executive Department
or the Legislative Department may convert property of
the State of public dominion into patrimonial property
of the State. No particular formula or procedure of
conversion is specified either in statute law or in case
law. Article 422 of the Civil Code simply states that:
"Property of public dominion, when no longer intended
for public use or for public service, shall form part of
the patrimonial property of the State". I respectfully
submit, therefore, that the only requirement which is
legitimately imposable is that the intent to convert
must be reasonably clear from a consideration of the
acts or acts of the Executive Department or of the
Legislative Department which are said to have effected
such conversion.
The same legal situation exists in respect of
conversion of property of public dominion belonging
to municipal corporations, i.e., local governmental
units, into patrimonial property of such entities.
In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481
230
[1975]), the City Council of Cebu by resolution
declared a certain portion of an existing street as an
abandoned road, "the same not being included in the
city development plan". Subsequently, by another
resolution, the City Council of Cebu authorized the
acting City Mayor to sell the land through public
bidding. Although there was no formal and explicit
declaration of conversion of property for public use into
patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street
subject of petitioner's application for
registration of title was withdrawn
from public use, it follows that such
withdrawn portion becomes
patrimonial property which can be the
object of an ordinary contract.
Article 422 of the Civil Code expressly
provides that "Property of public
dominion, when no longer intended
for public use of for public service,
shall form part of the patrimonial
property of the State."
Besides, the Revised Charter of the
City of Cebu heretofore quoted, in
very clear and unequivocal terms,
states that "Property thus withdrawn
from public servitude may be used or
conveyed for any purpose for which
other real property belonging to the
City may be lawfully used or
conveyed."
Accordingly, the withdrawal of the
property in question from public use
and its subsequent sale to the
petitioner is valid. Hence, the
petitioner has a registrable title over
the lot in question. (66 SCRA at 484-;
emphasis supplied)
Thus, again as pointed out by Sarmiento J., in his
separate opinion, in the case of property owned by
municipal corporations simple non-use or the actual
dedication of public property to some use other than
"public use" or some "public service", was sufficient
legally to convert such property into patrimonial
property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]-
Municipality of Hinunganan v. Director of Lands 24 Phil.
124 [1913]; Province of Zamboanga del Norte v. City of
Zamboanga, 22 SCRA 1334 (1968).
I would also add that such was the case not only in
respect of' property of municipal corporations but also
in respect of property of the State itself. Manresa in
commenting on Article 341 of the 1889 Spanish Civil
Code which has been carried over verbatim into our
Civil Code by Article 422 thereof, wrote:
La dificultad mayor en todo esto
estriba, naturalmente, en fijar el
momento en que los bienes de
dominio publico dejan de serlo. Si la
Administracion o la autoridad
competente legislative realizan qun
acto en virtud del cual cesa el destino
o uso publico de los bienes de que se
trata naturalmente la dificultad
queda desde el primer momento
resuelta. Hay un punto de partida
cierto para iniciar las relaciones
juridicas a que pudiera haber
lugar Pero puede ocurrir que no haya
taldeclaracion expresa, legislativa or
administrativa, y, sin embargo, cesar
de hecho el destino publico de los
bienes; ahora bien, en este caso, y para
los efectos juridicos que resultan de
entrar la cosa en el comercio de los
hombres,' se entedera que se ha
verificado la conversion de los bienes
patrimoniales?
El citado tratadista Ricci opina,
respecto del antiguo Codigo italiano,
por la afirmativa, y por nuestra parte
creemos que tal debe ser la soluciion.
El destino de las cosas no depende
tanto de una declaracion expresa
como del uso publico de las mismas, y
cuanda el uso publico cese con
respecto de determinados bienes,
cesa tambien su situacion en el
dominio publico. Si una fortaleza en
ruina se abandona y no se repara, si
un trozo de la via publica se
abandona tambien por constituir otro
nuevo an mejores
condiciones....ambos bienes cesan de
estar Codigo, y leyes especiales mas o
memos administrativas. (3 Manresa,
Comentarios al Codigo Civil Espanol,
p. 128 [7a ed.; 1952) (Emphasis
supplied)
The majority opinion says that none of the executive
acts pointed to by the Government purported,
expressly or definitely, to convert the Roppongi
property into patrimonial property — of the Republic.
Assuming that to be the case, it is respectfully
submitted that cumulative effect of the executive acts
here involved was to convert property originally
intended for and devoted to public service into
patrimonial property of the State, that is, property
susceptible of disposition to and appropration by
private persons. These executive acts, in their
totality if not each individual act, make crystal clear
the intent of the Executive Department to effect such
conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985,
which created a Committee to study the
disposition/utilization of the Government's property
in Japan, The Committee was composed of officials of
the Executive Department: the Executive Secretary;
the Philippine Ambassador to Japan; and
representatives of the Department of Foreign Affairs
and the Asset Privatization Trust. On 19 September
1988, the Committee recommended to the President
the sale of one of the lots (the lot specifically in
Roppongi) through public bidding. On 4 October 1988,
the President approved the recommendation of the
Committee.
231
On 14 December 1988, the Philippine Government by
diplomatic note informed the Japanese Ministry of
Foreign Affairs of the Republic's intention to dispose
of the property in Roppongi. The Japanese
Government through its Ministry of Foreign Affairs
replied that it interposed no objection to such
disposition by the Republic. Subsequently, the
President and the Committee informed the leaders of
the House of Representatives and of the Senate of the
Philippines of the proposed disposition of the
Roppongi property.
(b) Executive Order No. 296, which was issued by the
President on 25 July 1987. Assuming that the majority
opinion is right in saying that Executive Order No. 296
is insufficient to authorize the sale of the Roppongi
property, it is here submitted with respect that
Executive Order No. 296 is more than sufficient to
indicate an intention to convert the property previously
devoted to public service into patrimonial property
that is capable of being sold or otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years
for diplomatic or for any other public purposes.
Assuming (but only arguendo) that non-use does
not, by itself, automatically convert the property into
patrimonial property. I respectfully urge that
prolonged non-use, conjoined with the other factors
here listed, was legally effective to convert the lot in
Roppongi into patrimonial property of the State.
Actually, as already pointed out, case law involving
property of municipal corporations is to the effect that
simple non-use or the actual dedication of public
property to some use other than public use or public
service, was sufficient to convert such property into
patrimonial property of the local governmental entity
concerned. Also as pointed out above, Manresa
reached the same conclusion in respect of conversion
of property of the public domain of the State into
property of the private domain of the State.
The majority opinion states that "abandonment cannot
be inferred from the non-use alone especially if the
non-use was attributable not to the Government's own
deliberate and indubitable will but to lack of financial
support to repair and improve the property" (Majority
Opinion, p. 13). With respect, it may be stressed that
there is no abandonment involved here, certainly no
abandonment of property or of property rights. What
is involved is the charge of the classification of the
property from property of the public domain into
property of the private domain of the State. Moreover,
if for fourteen (14) years, the Government did not see
fit to appropriate whatever funds were necessary to
maintain the property in Roppongi in a condition
suitable for diplomatic representation purposes, such
circumstance may, with equal logic, be construed as a
manifestation of the crystalizing intent to change the
character of the property.
(d) On 30 March 1989, a public bidding was in fact
held by the Executive Department for the sale of the
lot in Roppongi. The circumstance that this bidding
was not successful certainly does not argue against an
intent to convert the property involved into property
that is disposable by bidding.
The above set of events and circumstances makes no
sense at all if it does not, as a whole, show at least the
intent on the part of the Executive Department (with
the knowledge of the Legislative Department) to
convert the property involved into patrimonial
property that is susceptible of being sold.
II
Having reached an affirmative answer in respect of the
first issue, it is necessary to address the second issue
of whether or not there exists legal authority for the
sale or disposition of the Roppongi property.
The majority opinion refers to Section 79(f) of the
Revised Administrative Code of 1917 which reads as
follows:
SEC. 79 (f). Conveyances and contracts
to which the Government is a party. —
In cases in which the Government of
the Republic of the Philippines is a
party to any deed or other
instrument conveying the title to real
estate or to any other property the
value of which is in excess of one
hundred thousand pesos, the
respective Department Secretary
shall prepare the necessary papers
which, together with the proper
recommendations, shall be submitted
to the Congress of the Philippines for
approval by the same. Such deed,
instrument, or contract shall be
executed and signed by the President
of the Philippines on behalf of the
Government of the Philippines unless
the authority therefor be expressly
vested by law in another officer.
(Emphasis supplied)
The majority opinion then goes on to state that: "[T]he
requirement has been retained in Section 4, Book I of
the Administrative Code of 1987 (Executive Order No.
292)" which reads:
SEC. 48. Official Authorized to Convey
Real Property. — Whenever real
property of the Government
is authorized by law to be conveyed,
the deed of conveyance shall be
executed in behalf of the government
by the following:
(1) For property belonging to and
titled in the name of the Republic of
the Philippines, by the President,
unless the authority therefor is
expressly vested by law in another
officer.
(2) For property belonging to the
Republic of the Philippines but titled
in the name of any political
subdivision or of any corporate
agency or instrumentality, by the
executive head of the agency or
instrumentality. (Emphasis supplied)
232
Two points need to be made in this connection.
Firstly, the requirement of obtaining specific
approval of Congress when the price of the real
property being disposed of is in excess of One Hundred
Thousand Pesos (P100,000.00) under the Revised
Administrative Code of 1917, has been deleted from
Section 48 of the 1987 Administrative Code. What
Section 48 of the present Administrative Code refers
to is authorization by law for the conveyance. Section
48 does not purport to be itself a source of legal
authority for conveyance of real property of the
Government. For Section 48 merely specifies the
official authorized to execute and sign on behalf of the
Government the deed of conveyance in case of such a
conveyance.
Secondly, examination of our statute books shows that
authorization by law for disposition of real property of
the private domain of the Government, has been
granted by Congress both in the form of (a) a general,
standing authorization for disposition of patrimonial
property of the Government; and (b) specific
legislation authorizing the disposition of particular
pieces of the Government's patrimonial property.
Standing legislative authority for the disposition of
land of the private domain of the Philippines is
provided by Act No. 3038, entitled "An Act Authorizing
the Secretary of Agriculture and Natural Resources to
Sell or Lease Land of the Private Domain of the
Government of the Philippine Islands (now Republic of
the Philippines)", enacted on 9 March 1922. The full
text of this statute is as follows:
Be it enacted by the Senate and House
of Representatives of the Philippines
in Legislature assembled and by the
authority of the same:
SECTION 1. The Secretary of
Agriculture and Natural Resources
(now Secretary of the Environment
and Natural Resources) is hereby
authorized to sell or lease land of the
private domain of the Government of
the Philippine Islands, or any part
thereof, to such persons, corporations
or associations as are, under the
provisions of Act Numbered Twenty-
eight hundred and seventy-four, (now
Commonwealth Act No. 141, as
amended) known as the Public Land
Act, entitled to apply for the purchase
or lease or agricultural public land.
SECTION 2. The sale of the land
referred to in the preceding
section shall, if such land is
agricultural, be made in the manner
and subject to the limitations
prescribed in chapters five and six,
respectively, of said Public Land Act,
and if it be classified differently, in
conformity with the provisions of
chapter nine of said Act: Provided,
however, That the land necessary for
the public service shall be exempt
from the provisions of this Act.
SECTION 3. This Act shall take effect
on its approval.
Approved, March 9, 1922. (Emphasis
supplied)
Lest it be assumed that Act No. 3038 refers only to
agricultural lands of the private domain of the State, it
must be noted that Chapter 9 of the old Public Land
Act (Act No. 2874) is now Chapter 9 of the present
Public Land Act (Commonwealth Act No. 141, as
amended) and that both statutes refer to: "any tract of
land of the public domain which being neither timber
nor mineral land, is intended to be used for residential
purposes or for commercial or industrial purposes other
than agricultural" (Emphasis supplied). In other
words, the statute covers the sale or lease or
residential, commercial or industrial land of the
private domain of the State.
Implementing regulations have been issued for the
carrying out of the provisions of Act No. 3038. On 21
December 1954, the then Secretary of Agriculture and
Natural Resources promulgated Lands Administrative
Orders Nos. 7-6 and 7-7 which were entitled,
respectively: "Supplementary Regulations Governing
the Sale of the Lands of the Private Domain of the
Republic of the Philippines"; and "Supplementary
Regulations Governing the Lease of Lands of Private
Domain of the Republic of the Philippines" (text in 51
O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although
now sixty-eight (68) years old, is still in effect and has
not been repealed. 1
Specific legislative authorization for disposition of
particular patrimonial properties of the State is
illustrated by certain earlier statutes. The first of these
was Act No. 1120, enacted on 26 April 1904, which
provided for the disposition of the friar lands,
purchased by the Government from the Roman
Catholic Church, to bona fide settlers and occupants
thereof or to other persons. In Jacinto v. Director of
Lands (49 Phil. 853 [1926]), these friar lands were
held to be private and patrimonial properties of the
State. Act No. 2360, enacted on -28 February 1914,
authorized the sale of the San Lazaro Estate located in
the City of Manila, which had also been purchased by
the Government from the Roman Catholic Church. In
January 1916, Act No. 2555 amended Act No. 2360 by
including therein all lands and buildings owned by the
Hospital and the Foundation of San Lazaro theretofor
leased by private persons, and which were also
acquired by the Philippine Government.
After the enactment in 1922 of Act No. 3038, there
appears, to my knowledge, to be only one statute
authorizing the President to dispose of a specific piece
of property. This statute is Republic Act No. 905,
enacted on 20 June 1953, which authorized the
President to sell an Identified parcel of land of the
private domain of the National Government to the
National Press Club of the Philippines, and to other
recognized national associations of professionals with
academic standing, for the nominal price of P1.00. It
appears relevant to note that Republic Act No. 905 was
not an outright disposition in perpetuity of the
233
property involved- it provided for reversion of the
property to the National Government in case the
National Press Club stopped using it for its
headquarters. What Republic Act No. 905 authorized
was really a donation, and not a sale.
The basic submission here made is that Act No. 3038
provides standing legislative authorization for
disposition of the Roppongi property which, in my
view, has been converted into patrimonial property of
the Republic. 2
To some, the submission that Act No. 3038 applies not
only to lands of the private domain of the State located
in the Philippines but also to patrimonial property
found outside the Philippines, may appear strange or
unusual. I respectfully submit that such position is not
any more unusual or strange than the assumption that
Article 420 of the Civil Code applies not only to
property of the Republic located within Philippine
territory but also to property found outside the
boundaries of the Republic.
It remains to note that under the well-settled doctrine
that heads of Executive Departments are alter egos of
the President (Villena v. Secretary of the Interior, 67
Phil. 451 [1939]), and in view of the constitutional
power of control exercised by the President over
department heads (Article VII, Section 17,1987
Constitution), the President herself may carry out the
function or duty that is specifically lodged in the
Secretary of the Department of Environment and
Natural Resources (Araneta v. Gatmaitan 101 Phil. 328
[1957]). At the very least, the President retains the
power to approve or disapprove the exercise of that
function or duty when done by the Secretary of
Environment and Natural Resources.
It is hardly necessary to add that the foregoing
analyses and submissions relate only to the austere
question of existence of legal power or authority. They
have nothing to do with much debated questions of
wisdom or propriety or relative desirability either of
the proposed disposition itself or of the proposed
utilization of the anticipated proceeds of the property
involved. These latter types of considerations He
within the sphere of responsibility of the political
departments of government the Executive and the
Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for
Prohibition in both G.R. Nos. 92013 and 92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea,
JJ., concurring.
Footnotes
Padilla, J.
1 Art. 422 of the Civil Code provides:
"Property of public dominion, when
no longer intended for public use or
public service, shall form part of the
patrimonial property of the State.
(341a)
Sarmiento, J.
1 Municipality of Oas v. Roa, 7 Phil. 20
(1906).
2 Municipality of Hinunangan v.
Director of Lands, 24 Phil. 124
(11913). The property involved here
was a fortress.
3 Harty v. Municipality of Victoria, 13
Phil. 152 (1909).
4 See also II TOLENTINO, CIVIL CODE
OF THE PHILIPPINES 39 (1972 ed.),
citing 3 Manresa III. See also Province
of Zamboanga del Norte v. City of
Zamboanga, No. L-24440, March 28,
1968, 22 SCRA 1334.
5 Ignacio v. Director of Lands, 108
Phil. 335, 339 (1960).
6 Cebu Oxygen & Acetylene Co., Inc.
vs. Bercilles, No. L-40474, August 29,
1975, 66 SCRA 481.
7 G.R. Nos. 92013 & 92047, 21.
8 Salas v. Jarencio, No. L-29788,
August 30, 1972, 46 SCRA 734;
Rabuco v. Villegas, No.
L-24916, February 28, 1974, 55 SCRA
658.
9 See Lianga Bay Logging Co., Inc. v.
Lopez Enage, No. L-30637, July 16,
1987, 152 SCRA 80.
10 CONST., art. XII, sec. 2.
Feliciano, J.
1 We are orally advised by the Office
of the Director of Lands that Act No.
3038 is very much in effect and that
the Bureau of Lands continues to date
to act under it. See also, in this
connection, Sections 2 and 4 of
Republic Act No. 477, enacted 9 June
1950 and as last amended by B.P. Blg
233. This statute government the
disposition of lands of the public
domain and of the private domain of
the State, including lands previously
vested in the United States Alien
Property Custodian and transferred
to the Republic of the Philippines.
2 Since Act No. 3038 established
certain qualifications for applicants
for purchase or lease of land of
private domain of the government, it
is relevant to note that Executive
Order No. 296, promulgated at a time
when the President was still
exercising legislative authority,
provides as follows:
234
 "Sec. 1. The provisions of Republic
Act No. 1789, as amended, and of
other laws, to the contrary
notwithstanding, the above
mentioned properties can be made
available for sale, lease or any other
manner of disposition to non-Filipino
citizens." (Emphasis supplied)
The Lawphil Project – Arellano
G.R. No. L-16749 January 31, 1963
IN THE MATTER OF THE TESTATE ESTATE OF
EDWARD E. CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY
CHRISTENSEN, Heir of the deceased, Executor and
Heir-appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-
appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First
Instance of Davao, Hon. Vicente N. Cusi, Jr., presiding,
in Special Proceeding No. 622 of said court, dated
September 14, 1949, approving among things the final
accounts of the executor, directing the executor to
reimburse Maria Lucy Christensen the amount of
P3,600 paid by her to Helen Christensen Garcia as her
legacy, and declaring Maria Lucy Christensen entitled
to the residue of the property to be enjoyed during her
lifetime, and in case of death without issue, one-half of
said residue to be payable to Mrs. Carrie Louise C.
Borton, etc., in accordance with the provisions of the
will of the testator Edward E. Christensen. The will
was executed in Manila on March 5, 1951 and contains
the following provisions:
3. I declare ... that I have but ONE (1) child,
named MARIA LUCY CHRISTENSEN (now Mrs.
Bernard Daney), who was born in the
Philippines about twenty-eight years ago, and
who is now residing at No. 665 Rodger Young
Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living
ascendants, and no descendants except my
above named daughter, MARIA LUCY
CHRISTENSEN DANEY.
xxx xxx xxx
7. I give, devise and bequeath unto MARIA
HELEN CHRISTENSEN, now married to
Eduardo Garcia, about eighteen years of age
and who, notwithstanding the fact that she
was baptized Christensen, is not in any way
related to me, nor has she been at any time
adopted by me, and who, from all information
I have now resides in Egpit, Digos, Davao,
Philippines, the sum of THREE THOUSAND
SIX HUNDRED PESOS (P3,600.00), Philippine
Currency the same to be deposited in trust for
the said Maria Helen Christensen with the
Davao Branch of the Philippine National Bank,
and paid to her at the rate of One Hundred
Pesos (P100.00), Philippine Currency per
month until the principal thereof as well as
any interest which may have accrued thereon,
is exhausted..
xxx xxx xxx
12. I hereby give, devise and bequeath, unto
my well-beloved daughter, the said MARIA
LUCY CHRISTENSEN DANEY (Mrs. Bernard
Daney), now residing as aforesaid at No. 665
Rodger Young Village, Los Angeles, California,
U.S.A., all the income from the rest, remainder,
and residue of my property and estate, real,
personal and/or mixed, of whatsoever kind or
character, and wheresoever situated, of which
I may be possessed at my death and which
may have come to me from any source
whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions
that the executor in his final account and project of
partition ratified the payment of only P3,600 to Helen
Christensen Garcia and proposed that the residue of
the estate be transferred to his daughter, Maria Lucy
Christensen.
Opposition to the approval of the project of partition
was filed by Helen Christensen Garcia, insofar as it
deprives her (Helen) of her legitime as an
acknowledged natural child, she having been declared
by Us in G.R. Nos. L-11483-84 an acknowledged
natural child of the deceased Edward E. Christensen.
The legal grounds of opposition are (a) that the
distribution should be governed by the laws of the
Philippines, and (b) that said order of distribution is
contrary thereto insofar as it denies to Helen
Christensen, one of two acknowledged natural
children, one-half of the estate in full ownership. In
amplification of the above grounds it was alleged that
the law that should govern the estate of the deceased
Christensen should not be the internal law of
California alone, but the entire law thereof because
several foreign elements are involved, that the forum
is the Philippines and even if the case were decided in
California, Section 946 of the California Civil Code,
which requires that the domicile of the decedent
should apply, should be applicable. It was also alleged
that Maria Helen Christensen having been declared an
acknowledged natural child of the decedent, she is
deemed for all purposes legitimate from the time of
her birth.
The court below ruled that as Edward E. Christensen
was a citizen of the United States and of the State of
California at the time of his death, the successional
rights and intrinsic validity of the provisions in his will
are to be governed by the law of California, in
accordance with which a testator has the right to
dispose of his property in the way he desires, because
the right of absolute dominion over his property is
sacred and inviolable (In re McDaniel's Estate, 77 Cal.
Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117
235
Cal. 286, 49 Pac. 192, cited in page 179, Record on
Appeal). Oppositor Maria Helen Christensen, through
counsel, filed various motions for reconsideration, but
these were denied. Hence, this appeal.
The most important assignments of error are as
follows:
I However, in 1928, he again departed the
THE LOWER COURT ERRED IN IGNORING THE
DECISION OF THE HONORABLE SUPREME COURT
THAT HELEN IS THE ACKNOWLEDGED NATURAL
CHILD OF EDWARD E. CHRISTENSEN AND,
CONSEQUENTLY, IN DEPRIVING HER OF HER JUST
SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING
AND/OR FAILING TO RECOGNIZE THE EXISTENCE OF
SEVERAL FACTORS, ELEMENTS AND
CIRCUMSTANCES CALLING FOR THE APPLICATION
OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO
RECOGNIZE THAT UNDER INTERNATIONAL LAW,
PARTICULARLY UNDER THE RENVOI DOCTRINE, THE
INTRINSIC VALIDITY OF THE TESTAMENTARY
DISPOSITION OF THE DISTRIBUTION OF THE ESTATE
OF THE DECEASED EDWARD E. CHRISTENSEN
SHOULD BE GOVERNED BY THE LAWS OF THE
PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING
THAT THE SCHEDULE OF DISTRIBUTION SUBMITTED
BY THE EXECUTOR IS CONTRARY TO THE PHILIPPINE
LAWS.
V California and resided there for nine years, and since
THE LOWER COURT ERRED IN NOT DECLARING
THAT UNDER THE PHILIPPINE LAWS HELEN
CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF
(1/2) OF THE ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a
citizen of the United States and of the State of
California at the time of his death. But there is also no
question that at the time of his death he was domiciled
in the Philippines, as witness the following facts
admitted by the executor himself in appellee's brief:
In the proceedings for admission of the will to
probate, the facts of record show that the
deceased Edward E. Christensen was born on
November 29, 1875 in New York City, N.Y.,
U.S.A.; his first arrival in the Philippines, as an
appointed school teacher, was on July 1, 1901,
on board the U.S. Army Transport "Sheridan"
with Port of Embarkation as the City of San
Francisco, in the State of California, U.S.A. He
stayed in the Philippines until 1904.
In December, 1904, Mr. Christensen returned
to the United States and stayed there for the
following nine years until 1913, during which
time he resided in, and was teaching school in
Sacramento, California.
Mr. Christensen's next arrival in the
Philippines was in July of the year 1913.
Philippines for the United States and came
back here the following year, 1929. Some nine
years later, in 1938, he again returned to his
own country, and came back to the
Philippines the following year, 1939.
Wherefore, the parties respectfully pray that
the foregoing stipulation of facts be admitted
and approved by this Honorable Court,
without prejudice to the parties adducing
other evidence to prove their case not covered
by this stipulation of facts. 1äwphï1.ñët
Being an American citizen, Mr. Christensen
was interned by the Japanese Military Forces
in the Philippines during World War II. Upon
liberation, in April 1945, he left for the United
States but returned to the Philippines in
December, 1945. Appellees Collective Exhibits
"6", CFI Davao, Sp. Proc. 622, as Exhibits "AA",
"BB" and "CC-Daney"; Exhs. "MM", "MM-l",
"MM-2-Daney" and p. 473, t.s.n., July 21,
1953.)
In April, 1951, Edward E. Christensen
returned once more to California shortly after
the making of his last will and testament (now
in question herein) which he executed at his
lawyers' offices in Manila on March 5, 1951.
He died at the St. Luke's Hospital in the City of
Manila on April 30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the
deceased is the Philippines, we are persuaded by the
fact that he was born in New York, migrated to
he came to the Philippines in 1913 he returned to
California very rarely and only for short visits
(perhaps to relatives), and considering that he appears
never to have owned or acquired a home or properties
in that state, which would indicate that he would
ultimately abandon the Philippines and make home in
the State of California.
Sec. 16. Residence is a term used with many
shades of meaning from mere temporary
presence to the most permanent abode.
Generally, however, it is used to denote
something more than mere physical presence.
(Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the
citizenship that he acquired in California when he
resided in Sacramento, California from 1904 to 1913,
was never lost by his stay in the Philippines, for the
latter was a territory of the United States (not a state)
until 1946 and the deceased appears to have
considered himself as a citizen of California by the fact
that when he executed his will in 1951 he declared
that he was a citizen of that State; so that he appears
236
never to have intended to abandon his California
citizenship by acquiring another. This conclusion is in
accordance with the following principle expounded by
Goodrich in his Conflict of Laws.
The terms "'residence" and "domicile" might
well be taken to mean the same thing, a place
of permanent abode. But domicile, as has been
shown, has acquired a technical meaning.
Thus one may be domiciled in a place where
he has never been. And he may reside in a
place where he has no domicile. The man with
two homes, between which he divides his
time, certainly resides in each one, while
living in it. But if he went on business which
would require his presence for several weeks
or months, he might properly be said to have
sufficient connection with the place to be
called a resident. It is clear, however, that, if
he treated his settlement as continuing only
for the particular business in hand, not giving
up his former "home," he could not be a
domiciled New Yorker. Acquisition of a
domicile of choice requires the exercise of
intention as well as physical presence.
"Residence simply requires bodily presence of
an inhabitant in a given place, while domicile
requires bodily presence in that place and
also an intention to make it one's domicile."
Residence, however, is a term used with many
shades of meaning, from the merest
temporary presence to the most permanent
abode, and it is not safe to insist that any one
use et the only proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary
dispositions is defined in Article 16 of the Civil Code of
the Philippines, which is as follows:
ART. 16. Real property as well as personal
property is subject to the law of the country
where it is situated.
However, intestate and testamentary
successions, both with respect to the order of
succession and to the amount of successional
rights and to the intrinsic validity of
testamentary provisions, shall be regulated by
the national law of the person whose
succession is under consideration, whatever
may be the nature of the property and
regardless of the country where said property
may be found.
The application of this article in the case at bar
requires the determination of the meaning of the
term "national law"is used therein.
There is no single American law governing the validity
of testamentary provisions in the United States, each
state of the Union having its own private law
applicable to its citizens only and in force only within
the state. The "national law" indicated in Article 16 of
the Civil Code above quoted can not, therefore,
possibly mean or apply to any general American law.
So it can refer to no other than the private law of the
State of California.
The next question is: What is the law in California
governing the disposition of personal property? The
decision of the court below, sustains the contention of
the executor-appellee that under the California
Probate Code, a testator may dispose of his property
by will in the form and manner he desires, citing the
case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P.
2d 952. But appellant invokes the provisions of Article
946 of the Civil Code of California, which is as follows:
If there is no law to the contrary, in the place
where personal property is situated, it is
deemed to follow the person of its owner, and
is governed by the law of his domicile.
The existence of this provision is alleged in appellant's
opposition and is not denied. We have checked it in
the California Civil Code and it is there. Appellee, on
the other hand, relies on the case cited in the decision
and testified to by a witness. (Only the case of
Kaufman is correctly cited.) It is argued on executor's
behalf that as the deceased Christensen was a citizen
of the State of California, the internal law thereof,
which is that given in the abovecited case, should
govern the determination of the validity of the
testamentary provisions of Christensen's will, such
law being in force in the State of California of which
Christensen was a citizen. Appellant, on the other
hand, insists that Article 946 should be applicable, and
in accordance therewith and following the doctrine of
the renvoi, the question of the validity of the
testamentary provision in question should be referred
back to the law of the decedent's domicile, which is the
Philippines.
The theory of doctrine of renvoi has been defined by
various authors, thus:
The problem has been stated in this way:
"When the Conflict of Laws rule of the forum
refers a jural matter to a foreign law for
decision, is the reference to the purely
internal rules of law of the foreign system; i.e.,
to the totality of the foreign law minus its
Conflict of Laws rules?"
On logic, the solution is not an easy one. The
Michigan court chose to accept the renvoi,
that is, applied the Conflict of Laws rule of
Illinois which referred the matter back to
Michigan law. But once having determined the
the Conflict of Laws principle is the rule
looked to, it is difficult to see why the
reference back should not have been to
Michigan Conflict of Laws. This would have
resulted in the "endless chain of references"
which has so often been criticized be legal
writers. The opponents of the renvoi would
have looked merely to the internal law of
Illinois, thus rejecting the renvoi or the
reference back. Yet there seems no compelling
logical reason why the original reference
should be the internal law rather than to the
Conflict of Laws rule. It is true that such a
solution avoids going on a merry-go-round,
but those who have accepted
the renvoi theory avoid this inextricabilis
circulas by getting off at the second reference
and at that point applying internal law.
237
Perhaps the opponents of the renvoi are a bit
more consistent for they look always to
internal law as the rule of reference.
Strangely enough, both the advocates for and
the objectors to the renvoi plead that greater
uniformity will result from adoption of their
respective views. And still more strange is the
fact that the only way to achieve uniformity in
this choice-of-law problem is if in the dispute
the two states whose laws form the legal basis
of the litigation disagree as to whether
the renvoi should be accepted. If both reject,
or both accept the doctrine, the result of the
litigation will vary with the choice of the
forum. In the case stated above, had the
Michigan court rejected the renvoi, judgment
would have been against the woman; if the
suit had been brought in the Illinois courts,
and they too rejected the renvoi, judgment
would be for the woman. The same result
would happen, though the courts would
switch with respect to which would hold
liability, if both courts accepted the renvoi.
The Restatement accepts the renvoi theory in
two instances: where the title to land is in
question, and where the validity of a decree of
divorce is challenged. In these cases the
Conflict of Laws rule of the situs of the land, or
the domicile of the parties in the divorce case,
is applied by the forum, but any further
reference goes only to the internal law. Thus,
a person's title to land, recognized by the
situs, will be recognized by every court; and
every divorce, valid by the domicile of the
parties, will be valid everywhere. (Goodrich,
Conflict of Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate,
domiciled in France, leaving movable
property in Massachusetts, England, and
France. The question arises as to how this
property is to be distributed among X's next of
kin.
Assume (1) that this question arises in a
Massachusetts court. There the rule of the
conflict of laws as to intestate succession to
movables calls for an application of the law of
the deceased's last domicile. Since by
hypothesis X's last domicile was France, the
natural thing for the Massachusetts court to
do would be to turn to French statute of
distributions, or whatever corresponds
thereto in French law, and decree a
distribution accordingly. An examination of
French law, however, would show that if a
French court were called upon to determine
how this property should be distributed, it
would refer the distribution to the national
law of the deceased, thus applying the
Massachusetts statute of distributions. So on
the surface of things the Massachusetts court
has open to it alternative course of action: (a)
either to apply the French law is to intestate
succession, or (b) to resolve itself into a
French court and apply the Massachusetts
statute of distributions, on the assumption
that this is what a French court would do. If it
accepts the so-called renvoidoctrine, it will
follow the latter course, thus applying its own
law.
This is one type of renvoi. A jural matter is
presented which the conflict-of-laws rule of
the forum refers to a foreign law, the conflict-
of-laws rule of which, in turn, refers the
matter back again to the law of the forum.
This is renvoi in the narrower sense. The
German term for this judicial process is
'Ruckverweisung.'" (Harvard Law Review, Vol.
31, pp. 523-571.)
After a decision has been arrived at that a
foreign law is to be resorted to as governing a
particular case, the further question may
arise: Are the rules as to the conflict of laws
contained in such foreign law also to be
resorted to? This is a question which, while it
has been considered by the courts in but a few
instances, has been the subject of frequent
discussion by textwriters and essayists; and
the doctrine involved has been descriptively
designated by them as the "Renvoyer" to send
back, or the "Ruchversweisung", or the
"Weiterverweisung", since an affirmative
answer to the question postulated and the
operation of the adoption of the foreign law in
toto would in many cases result in returning
the main controversy to be decided according
to the law of the forum. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine
of renvoi", has been advanced. The theory of
the doctrine of renvoi is that the court of the
forum, in determining the question before it,
must take into account the whole law of the
other jurisdiction, but also its rules as to
conflict of laws, and then apply the law to the
actual question which the rules of the other
jurisdiction prescribe. This may be the law of
the forum. The doctrine of the renvoi has
generally been repudiated by the American
authorities. (2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined
and the reasons for its application in a country
explained by Prof. Lorenzen in an article in the Yale
Law Journal, Vol. 27, 1917-1918, pp. 529-531. The
pertinent parts of the article are quoted herein below:
The recognition of the renvoi theory implies
that the rules of the conflict of laws are to be
understood as incorporating not only the
ordinary or internal law of the foreign state or
country, but its rules of the conflict of laws as
well. According to this theory 'the law of a
country' means the whole of its law.
xxx xxx xxx
Von Bar presented his views at the meeting of
the Institute of International Law, at
Neuchatel, in 1900, in the form of the
following theses:
238
 (1) Every court shall observe the law of its
country as regards the application of foreign
laws.
(2) Provided that no express provision to the
contrary exists, the court shall respect:
(a) The provisions of a foreign law
which disclaims the right to bind its
nationals abroad as regards their
personal statute, and desires that said
personal statute shall be determined
by the law of the domicile, or even by
the law of the place where the act in
question occurred.
(b) The decision of two or more
foreign systems of law, provided it be
certain that one of them is necessarily
competent, which agree in attributing
the determination of a question to the
same system of law.
xxx xxx xxx
If, for example, the English law directs its
judge to distribute the personal estate of an
Englishman who has died domiciled in
Belgium in accordance with the law of his
domicile, he must first inquire whether the
law of Belgium would distribute personal
property upon death in accordance with the
law of domicile, and if he finds that the
Belgian law would make the distribution in
accordance with the law of nationality — that
is the English law — he must accept this
reference back to his own law.
We note that Article 946 of the California Civil Code is
its conflict of laws rule, while the rule applied in In re
Kaufman, Supra, its internal law. If the law on
succession and the conflict of laws rules of California
are to be enforced jointly, each in its own intended and
appropriate sphere, the principle cited In re Kaufman
should apply to citizens living in the State, but Article
946 should apply to such of its citizens as are not
domiciled in California but in other jurisdictions. The
rule laid down of resorting to the law of the domicile
in the determination of matters with foreign element
involved is in accord with the general principle of
American law that the domiciliary law should govern
in most matters or rights which follow the person of
the owner.
When a man dies leaving personal property in
one or more states, and leaves a will directing
the manner of distribution of the property, the
law of the state where he was domiciled at the
time of his death will be looked to in deciding
legal questions about the will, almost as
completely as the law of situs is consulted in
questions about the devise of land. It is logical
that, since the domiciliary rules control
devolution of the personal estate in case of
intestate succession, the same rules should
determine the validity of an attempted
testamentary dispostion of the property. Here,
also, it is not that the domiciliary has effect
beyond the borders of the domiciliary state.
The rules of the domicile are recognized as
controlling by the Conflict of Laws rules at the
situs property, and the reason for the
recognition as in the case of intestate
succession, is the general convenience of the
doctrine. The New York court has said on the
point: 'The general principle that a dispostiton
of a personal property, valid at the domicile of
the owner, is valid anywhere, is one of the
universal application. It had its origin in that
international comity which was one of the
first fruits of civilization, and it this age, when
business intercourse and the process of
accumulating property take but little notice of
boundary lines, the practical wisdom and
justice of the rule is more apparent than ever.
(Goodrich, Conflict of Laws, Sec. 164, pp. 442-
443.)
Appellees argue that what Article 16 of the Civil Code
of the Philippines pointed out as the national law is the
internal law of California. But as above explained the
laws of California have prescribed two sets of laws for
its citizens, one for residents therein and another for
those domiciled in other jurisdictions. Reason
demands that We should enforce the California
internal law prescribed for its citizens residing
therein, and enforce the conflict of laws rules for the
citizens domiciled abroad. If we must enforce the law
of California as in comity we are bound to go, as so
declared in Article 16 of our Civil Code, then we must
enforce the law of California in accordance with the
express mandate thereof and as above explained, i.e.,
apply the internal law for residents therein, and its
conflict-of-laws rule for those domiciled abroad.
It is argued on appellees' behalf that the clause "if
there is no law to the contrary in the place where the
property is situated" in Sec. 946 of the California Civil
Code refers to Article 16 of the Civil Code of the
Philippines and that the law to the contrary in the
Philippines is the provision in said Article 16 that
the national law of the deceased should govern. This
contention can not be sustained. As explained in the
various authorities cited above the national law
mentioned in Article 16 of our Civil Code is the law on
conflict of laws in the California Civil Code, i.e., Article
946, which authorizes the reference or return of the
question to the law of the testator's domicile. The
conflict of laws rule in California, Article 946, Civil
Code, precisely refers back the case, when a decedent
is not domiciled in California, to the law of his
domicile, the Philippines in the case at bar. The court
of the domicile can not and should not refer the case
back to California; such action would leave the issue
incapable of determination because the case will then
be like a football, tossed back and forth between the
two states, between the country of which the decedent
was a citizen and the country of his domicile. The
Philippine court must apply its own law as directed in
the conflict of laws rule of the state of the decedent, if
the question has to be decided, especially as the
application of the internal law of California provides
no legitime for children while the Philippine law, Arts.
887(4) and 894, Civil Code of the Philippines, makes
natural children legally acknowledged forced heirs of
the parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil.
156; Riera vs. Palmaroli, 40 Phil. 105; Miciano vs.
239
Brimo, 50 Phil. 867; Babcock Templeton vs. Rider
Babcock, 52 Phil. 130; and Gibbs vs. Government, 59
Phil. 293.) cited by appellees to support the decision
can not possibly apply in the case at bar, for two
important reasons, i.e., the subject in each case does
not appear to be a citizen of a state in the United States
but with domicile in the Philippines, and it does not
appear in each case that there exists in the state of
which the subject is a citizen, a law similar to or
identical with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased
Christensen, a citizen of California, is the Philippines,
the validity of the provisions of his will depriving his
acknowledged natural child, the appellant, should be
governed by the Philippine Law, the domicile,
pursuant to Art. 946 of the Civil Code of California, not
by the internal law of California..
WHEREFORE, the decision appealed from is hereby
reversed and the case returned to the lower court with
instructions that the partition be made as the
Philippine law on succession provides. Judgment
reversed, with costs against appellees.
Padilla, Bautista Angelo, Concepcion, Reyes, Barrera,
Paredes, Dizon, Regala and Makalintal, JJ., concur.
Bengzon, C.J., took no part.
The Lawphil Project - Arellano Law Foundation
G.R. No. L-23678 June 6, 1967
TESTATE ESTATE OF AMOS G. BELLIS, deceased.
PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA
BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.
Vicente R. Macasaet and Jose D. Villena for oppositors
appellants.
Paredes, Poblador, Cruz and Nazareno for heirs-
appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust
Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of
law, from an order of the Court of First Instance of
Manila dated April 30, 1964, approving the project of
partition filed by the executor in Civil Case No. 37089
therein.1äwphï1.ñët
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the
State of Texas and of the United States." By his first
wife, Mary E. Mallen, whom he divorced, he had five
legitimate children: Edward A. Bellis, George Bellis
(who pre-deceased him in infancy), Henry A. Bellis,
Alexander Bellis and Anna Bellis Allsman; by his
second wife, Violet Kennedy, who survived him, he had
three legitimate children: Edwin G. Bellis, Walter S.
Bellis and Dorothy Bellis; and finally, he had three
illegitimate children: Amos Bellis, Jr., Maria Cristina
Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in
the Philippines, in which he directed that after all
taxes, obligations, and expenses of administration are
paid for, his distributable estate should be divided, in
trust, in the following order and manner: (a)
$240,000.00 to his first wife, Mary E. Mallen; (b)
P120,000.00 to his three illegitimate children, Amos
Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis, or
P40,000.00 each and (c) after the foregoing two items
have been satisfied, the remainder shall go to his
seven surviving children by his first and second wives,
namely: Edward A. Bellis, Henry A. Bellis, Alexander
Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter
S. Bellis, and Dorothy E. Bellis, in equal
shares.1äwphï1.ñët
Subsequently, or on July 8, 1958, Amos G. Bellis died a
resident of San Antonio, Texas, U.S.A. His will was
admitted to probate in the Court of First Instance of
Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of
the will, paid all the bequests therein including the
amount of $240,000.00 in the form of shares of stock
to Mary E. Mallen and to the three (3) illegitimate
children, Amos Bellis, Jr., Maria Cristina Bellis and
Miriam Palma Bellis, various amounts totalling
P40,000.00 each in satisfaction of their respective
legacies, or a total of P120,000.00, which it released
from time to time according as the lower court
approved and allowed the various motions or
petitions filed by the latter three requesting partial
advances on account of their respective legacies.
On January 8, 1964, preparatory to closing its
administration, the executor submitted and filed its
"Executor's Final Account, Report of Administration
and Project of Partition" wherein it reported, inter alia,
the satisfaction of the legacy of Mary E. Mallen by the
delivery to her of shares of stock amounting to
$240,000.00, and the legacies of Amos Bellis, Jr., Maria
Cristina Bellis and Miriam Palma Bellis in the amount
of P40,000.00 each or a total of P120,000.00. In the
project of partition, the executor — pursuant to the
"Twelfth" clause of the testator's Last Will and
Testament — divided the residuary estate into seven
equal portions for the benefit of the testator's seven
legitimate children by his first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam
Palma Bellis filed their respective oppositions to the
project of partition on the ground that they were
deprived of their legitimes as illegitimate children and,
therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite
notice to him, proof of service of which is evidenced by
the registry receipt submitted on April 27, 1964 by the
executor.1
After the parties filed their respective memoranda and
other pertinent pleadings, the lower court, on April 30,
240
1964, issued an order overruling the oppositions and
approving the executor's final account, report and
administration and project of partition. Relying upon
Art. 16 of the Civil Code, it applied the national law of
the decedent, which in this case is Texas law, which
did not provide for legitimes.
Their respective motions for reconsideration having
been denied by the lower court on June 11, 1964,
oppositors-appellants appealed to this Court to raise
the issue of which law must apply — Texas law or
Philippine law.
In this regard, the parties do not submit the case on,
nor even discuss, the doctrine of renvoi, applied by
this Court in Aznar v. Christensen Garcia, L-16749,
January 31, 1963. Said doctrine is usually pertinent
where the decedent is a national of one country, and a
domicile of another. In the present case, it is not
disputed that the decedent was both a national of
Texas and a domicile thereof at the time of his
death.2 So that even assuming Texas has a conflict of
law rule providing that the domiciliary system (law of
the domicile) should govern, the same would not
result in a reference back (renvoi) to Philippine law,
but would still refer to Texas law. Nonetheless, if
Texas has a conflicts rule adopting the situs theory (lex
rei sitae) calling for the application of the law of the
place where the properties are situated, renvoi would
arise, since the properties here involved are found in
the Philippines. In the absence, however, of proof as to
the conflict of law rule of Texas, it should not be
presumed different from ours.3 Appellants' position is
therefore not rested on the doctrine of renvoi. As
stated, they never invoked nor even mentioned it in
their arguments. Rather, they argue that their case
falls under the circumstances mentioned in the third
paragraph of Article 17 in relation to Article 16 of the
Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code,
render applicable the national law of the decedent, in
intestate or testamentary successions, with regard to
four items: (a) the order of succession; (b) the amount
of successional rights; (e) the intrinsic validity of the
provisions of the will; and (d) the capacity to succeed.
They provide that —
ART. 16. Real property as well as personal
property is subject to the law of the country
where it is situated.
However, intestate and testamentary
successions, both with respect to the order of
succession and to the amount of successional
rights and to the intrinsic validity of
testamentary provisions, shall be regulated by
the national law of the person whose
succession is under consideration, whatever
may he the nature of the property and
regardless of the country wherein said
property may be found.
ART. 1039. Capacity to succeed is governed by
the law of the nation of the decedent.
Appellants would however counter that Art. 17,
paragraph three, of the Civil Code, stating that —
Prohibitive laws concerning persons, their
acts or property, and those which have for
their object public order, public policy and
good customs shall not be rendered
ineffective by laws or judgments promulgated,
or by determinations or conventions agreed
upon in a foreign country.
prevails as the exception to Art. 16, par. 2 of the Civil
Code afore-quoted. This is not correct. Precisely,
Congress deleted the phrase, "notwithstanding the
provisions of this and the next preceding article" when
they incorporated Art. 11 of the old Civil Code as Art.
17 of the new Civil Code, while reproducing without
substantial change the second paragraph of Art. 10 of
the old Civil Code as Art. 16 in the new. It must have
been their purpose to make the second paragraph of
Art. 16 a specific provision in itself which must be
applied in testate and intestate succession. As further
indication of this legislative intent, Congress added a
new provision, under Art. 1039, which decrees that
capacity to succeed is to be governed by the national
law of the decedent.
It is therefore evident that whatever public policy or
good customs may be involved in our System of
legitimes, Congress has not intended to extend the
same to the succession of foreign nationals. For it has
specifically chosen to leave, inter alia, the amount of
successional rights, to the decedent's national law.
Specific provisions must prevail over general ones.
Appellants would also point out that the decedent
executed two wills — one to govern his Texas estate
and the other his Philippine estate — arguing from
this that he intended Philippine law to govern his
Philippine estate. Assuming that such was the
decedent's intention in executing a separate Philippine
will, it would not alter the law, for as this Court ruled
in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a
foreigner's will to the effect that his properties shall be
distributed in accordance with Philippine law and not
with his national law, is illegal and void, for his
national law cannot be ignored in regard to those
matters that Article 10 — now Article 16 — of the Civil
Code states said national law should govern.
The parties admit that the decedent, Amos G. Bellis,
was a citizen of the State of Texas, U.S.A., and that
under the laws of Texas, there are no forced heirs or
legitimes. Accordingly, since the intrinsic validity of
the provision of the will and the amount of
successional rights are to be determined under Texas
law, the Philippine law on legitimes cannot be applied
to the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby
affirmed in toto, with costs against appellants. So
ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal,
Zaldivar, Sanchez and Castro, JJ., concur.
Footnotes
241
 1He later filed a motion praying that as a legal
heir he be included in this case as one of the
oppositors-appellants; to file or adopt the
opposition of his sisters to the project of
partition; to submit his brief after paying his
proportionate share in the expenses incurred
in the printing of the record on appeal; or to
allow him to adopt the briefs filed by his
sisters — but this Court resolved to deny the
motion.
2San Antonio, Texas was his legal residence.
3Lim vs. Collector, 36 Phil. 472; In re Testate
Estate of Suntay, 95 Phil. 500.
The Lawphil Project - Arellano Law Foundation
G.R. No. 205487 November 12, 2014
ORION SAVINGS BANK, Petitioner,
vs.
SHIGEKANE SUZUKI, Respondent.
DECISION
BRION, J.:
Before us is the Petition for Review on Certiorari1 filed
by petitioner Orion Savings Bank (Orion) under Rule
45 of the Rules of Court, assailing the decision2 dated
August 23, 2012 and the resolution3 dated January 25,
2013 of the Court of Appeals (CA) in CA-G.R. CV No.
94104.
The Factual Antecedents
In the first week of August 2003, respondent
Shigekane Suzuki (Suzuki), a Japanese national, met
with Ms. Helen Soneja (Soneja) to inquire about a
condominium unit and a parking slot at Cityland
Pioneer, Mandaluyong City, allegedly owned by Yung
Sam Kang (Kang), a Korean national and a Special
Resident Retiree's Visa (SRRV) holder.
At the meeting, Soneja informed Suzuki that Unit No.
536 [covered by Condominium Certificate of Title
(CCT) No. 18186]4 and Parking Slot No. 42 [covered by
CCT No. 9118]5 were for sale for ₱3,000,000.00. Soneja
likewise assured Suzuki that the titles to the unit and
the parking slot were clean. After a brief negotiation,
the parties agreed to reduce the price to
₱2,800,000.00. On August 5, 2003, Suzuki issued Kang
a Bank of the Philippine Island (BPI) Check No.
833496 for One Hundred Thousand Pesos
(₱100,000.00) as reservation fee.7 On August 21, 2003,
Suzuki issued Kang another check, BPI Check No.
83350,8 this time for ₱2,700,000.00 representing the
remaining balance of the purchase price. Suzuki and
Kang then executed a Deed of Absolute Sale dated
August 26, 20039covering Unit No. 536 and Parking
Slot No. 42. Soon after, Suzuki took possession of the
condominium unit and parking lot, and commenced
the renovation of the interior of the condominium
unit.
Kang thereafter made several representations with
Suzuki to deliver the titles to the properties, which
were then allegedly in possession of Alexander Perez
(Perez, Orion’s Loans Officer) for safekeeping. Despite
several verbal demands, Kang failed to deliver the
documents. Suzuki later on learned that Kang had left
the country, prompting Suzuki to verify the status of
the properties with the Mandaluyong City Registry of
Deeds.
Before long, Suzuki learned that CCT No. 9118
representing the title to the Parking Slot No. 42
contained no annotations although it remained under
the name of Cityland Pioneer. This notwithstanding,
Cityland Pioneer, through Assistant Vice President
Rosario D. Perez, certified that Kang had fully paid the
purchase price of Unit. No. 53610 and Parking Slot No.
42.11 CCT No. 18186 representing the title to the
condominium unit had no existing encumbrance,
except for anannotation under Entry No. 73321/C-
10186 which provided that any conveyance or
encumbrance of CCT No. 18186 shall be subject to
approval by the Philippine Retirement Authority
(PRA). Although CCT No. 18186 contained Entry No.
66432/C-10186 dated February 2, 1999 representing
a mortgage in favor of Orion for a ₱1,000,000.00 loan,
that annotation was subsequently cancelled on June
16, 2000 by Entry No. 73232/T. No. 10186. Despite
the cancellation of the mortgage to Orion, the titles to
the properties remained in possession of Perez.
To protect his interests, Suzuki thenexecuted an
Affidavit of Adverse Claim12 dated September 8, 2003,
withthe Registry of Deeds of Mandaluyong City,
annotated as Entry No. 3292/C-No. 18186 in CCT No.
18186. Suzuki then demanded the delivery of the
titles.13 Orion, (through Perez), however, refused to
surrender the titles, and cited the need to consult
Orion’s legal counsel as its reason.
On October 14, 2003, Suzuki received a letter from
Orion’s counsel dated October 9, 2003, stating that
Kang obtained another loan in the amount of
₱1,800,000.00. When Kang failed to pay, he executed a
Dacion en Pagodated February 2, 2003, in favorof
Orion covering Unit No. 536. Orion, however, did not
register the Dacion en Pago, until October 15, 2003.
On October 28, 2003, Suzuki executed an Affidavit of
Adverse Claim over Parking Slot No. 42 (covered by
CCT No. 9118) and this was annotated as Entry No.
4712/C-No. 9118 in the parking lot’s title.
On January 27, 2004, Suzuki filed a complaint for
specific performance and damages against Kang and
Orion. At the pre-trial, the parties made the following
admissions and stipulations:
1. That as of August 26, 2003, Kang was the
registered owner of Unit No. 536 and Parking
Slot No. 42;
2. That the mortgage in favor ofOrion
supposedly executed by Kang, with Entry No.
66432/C-10186 dated February 2, 1999, was
242
 subsequently cancelled by Entry No. 73232/T
No. 10186 dated June 16, 2000;
3. That the alleged Dacion en Pagowas never
annotated in CCT Nos. 18186 and 9118;
4. That Orion only paid the appropriate capital
gains tax and the documentary stamp tax for
the alleged Dacion en Pago on October 15,
2003;
5. That Parking Slot No. 42, covered by CCT
No. 9118, was never mortgaged to Orion; and
6. That when Suzuki bought the properties, he
went to Orion to obtain possession of the
titles.
The RTC Ruling
In its decision14 dated June 29, 2009, the Regional Trial
Court (RTC), Branch 213, Mandaluyong City ruled
infavor of Suzuki and ordered Orion to deliver the CCT
Nos. 18186 and 9118 to Suzuki.
The court found that Suzuki was an innocent
purchaser for value whose rights over the properties
prevailed over Orion’s. The RTC further noted that
Suzuki exerted efforts to verify the status of the
properties but he did not find any existing
encumbrance inthe titles. Although Orion claims to
have purchased the property by way of a Dacion en
Pago, Suzuki only learned about it two (2) months
after he bought the properties because Orion never
bothered to register or annotate the Dacion en Pagoin
CCT Nos. 18186 and 9116.
The RTC further ordered Orion and Kang to jointly and
severally pay Suzuki moral damages, exemplary
damages, attorney’s fees, appearance fees, expenses
for litigation and cost ofsuit. Orion timely appealed the
RTC decision with the CA.
The CA Ruling
On August 23, 2012, the CA partially granted Orion’s
appeal and sustained the RTC insofar as it upheld
Suzuki’s right over the properties. The CA further
noted that Entry No. 73321/C-10186 pertaining to the
withdrawal of investment of an SRRV only serves as a
warning to an SRRV holder about the implications of a
conveyance of a property investment. It deviated from
the RTC ruling, however, by deleting the award for
moral damages, exemplary damages, attorney’s fees,
expenses for litigation and cost of suit.
Orion sought a reconsideration of the CA decision but
the CA denied the motion in its January 25, 2013
resolution. Orion then filed a petition for review on
certiorariunder Rule 45 with this Court.
The Petition and Comment
Orion’s petition is based on the following
grounds/arguments:15
1. The Deed of Sale executed by Kang in favor
of Suzuki is null and void. Under Korean law,
any conveyance of a conjugal property should
be made with the consent of both spouses;
2. Suzuki is not a buyer in good faith for he
failed to check the owner’s duplicate copies of
the CCTs;
3. Knowledge of the PRA restriction under
Entry No. 73321/C-10186, which prohibits
any conveyance or encumbrance of the
property investment, defeats the alleged claim
of good faith by Suzuki; and
4. Orion should not be faulted for exercising
due diligence.
In his Comment,16 Suzuki asserts that the issue on
spousal consent was belatedly raised on appeal.
Moreover, proof of acquisition during the marital
coverture is a condition sine qua nonfor the operation
of the presumption of conjugal ownership.17 Suzuki
additionally maintains that he is a purchaser in good
faith, and is thus entitled to the protection of the law.
The Court’s Ruling
We deny the petition for lack of merit.
The Court may inquire into conclusions of fact when
the inference made is manifestly mistaken
In a Rule 45 petition, the latitude of judicial review
generally excludes a factual and evidentiary re-
evaluation, and the Court ordinarily abides by the
uniform factual conclusions of the trial court and the
appellate court.18 In the present case, while the courts
below both arrived at the same conclusion, there
appears tobe an incongruence in their factual findings
and the legal principle they applied to the attendant
factual circumstances. Thus, we are compelled to
examine certain factual issues in the exercise of our
sound discretion to correct any mistaken inference
that may have been made.19
Philippine Law governs the transfer of real property
Orion believes that the CA erred in not ruling on the
issue of spousal consent. We cannot uphold this
position, however, because the issue of spousal
consent was only raised on appeal to the CA. It is a
well-settled principle that points of law, theories,
issues, and arguments not brought to the attention of
the trial court cannot be raised for the first time on
appeal and considered by a reviewing court.20 To
consider these belated arguments would violate basic
principles of fairplay, justice, and due process.
Having said these, we shall nonetheless discuss the
issues Orion belatedly raised, if only to put an end to
lingering doubts on the correctness of the denial of the
present petition.
It is a universal principle thatreal or immovable
property is exclusively subject to the laws of the
country or state where it is located.21 The reason is
found in the very nature of immovable property — its
243
immobility. Immovables are part of the country and so
closely connected to it that all rights over them have
their natural center of gravity there.22
Thus, all matters concerning the titleand disposition
ofreal property are determined by what is known as
the lex loci rei sitae, which can alone prescribe the
mode by which a title canpass from one person to
another, or by which an interest therein can be gained
or lost.23 This general principle includes all rules
governing the descent, alienation and transfer of
immovable property and the validity, effect and
construction of wills and other conveyances.24
This principle even governs the capacity of the person
making a deed relating to immovable property, no
matter what its nature may be. Thus, an instrument
will be ineffective to transfer title to land if the person
making it is incapacitated by the lex loci rei sitae, even
though under the law of his domicile and by the law of
the place where the instrument is actually made, his
capacity is undoubted.25
On the other hand, property relations between
spouses are governed principally by the national law
of the spouses.26 However, the party invoking the
application of a foreign law has the burden of proving
the foreign law. The foreign law is a question of fact to
be properly pleaded and proved as the judge cannot
take judicial notice of a foreign law.27 He is presumed
to know only domestic or the law of the forum.28
To prove a foreign law, the party invoking it must
present a copy thereof and comply with Sections 24
and 25 of Rule 132 of the Revised Rules of Court which
reads:
SEC. 24. Proof of official record. — The record of
public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be
evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of
the record, or by his deputy, and accompanied, if the
record is not kept in the Philippines, with a certificate
that such officer has the custody. If the office in which
the record is kept is in a foreign country, the certificate
may be made by a secretary of the embassy or
legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service
of the Philippines stationed in the foreign country
inwhich the record is kept, and authenticated by the
seal of his office. (Emphasis supplied)
SEC. 25. What attestation ofcopy must state. —
Whenever a copy of a document or record is attested
for the purpose of the evidence, the attestation must
state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may
be. The attestation must be under the official seal of
the attesting officer, if there be any, or if he be the
clerk of a court having a seal, under the seal of such
court.
Accordingly, matters concerning the title and
disposition of real property shall be governed by
Philippine law while issues pertaining to the conjugal
natureof the property shall be governed by South
Korean law, provided it is proven as a fact.
In the present case, Orion, unfortunately failed to
prove the South Korean law on the conjugal ownership
ofproperty. It merely attached a "Certification from the
Embassy of the Republic of Korea"29 to prove the
existence of Korean Law. This certification, does not
qualify as sufficient proof of the conjugal nature of the
property for there is no showing that it was properly
authenticated bythe seal of his office, as required
under Section 24 of Rule 132.30
Accordingly, the International Law doctrine of
presumed-identity approachor processual
presumption comes into play, i.e., where a foreign law
is not pleaded or, evenif pleaded, is not proven, the
presumption is that foreign law is the same as
Philippine Law.31
Under Philippine Law, the phrase "Yung Sam Kang
‘married to' Hyun Sook Jung" is merely descriptive of
the civil status of Kang.32 In other words, the import
from the certificates of title is that Kang is the owner
of the properties as they are registered in his name
alone, and that he is married to Hyun Sook Jung.
We are not unmindful that in numerous cases we have
held that registration of the property in the name of
only one spouse does not negate the possibility of it
being conjugal or community property.33 In those
cases, however, there was proof that the properties,
though registered in the name of only one spouse,
were indeed either conjugal or community
properties.34 Accordingly, we see no reason to declare
as invalid Kang’s conveyance in favor of Suzuki for the
supposed lack of spousal consent.
The petitioner failed to adduce sufficient evidence to
prove the due execution of the Dacion en Pago
Article 1544 of the New Civil Codeof the Philippines
provides that:
ART. 1544. If the same thing should have been sold to
different vendees, the ownership shall be transferred
to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall
belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall
pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good
faith.
The application of Article 1544 of the New Civil Code
presupposes the existence of two or more duly
executed contracts of sale. In the present case, the
Deed of Sale dated August 26, 200335 between Suzuki
and Kang was admitted by Orion36 and was properly
identified by Suzuki’s witness Ms. Mary Jane Samin
(Samin).37
It is not disputed, too, that the Deed of Sale dated
August 26, 2003 was consummated. In a contract of
sale, the seller obligates himself to transfer the
ownership of the determinate thing sold, and to
244
deliver the same to the buyer, who obligates himself to
pay a price certain to the seller.38 The execution of the
notarized deed of saleand the actual transfer of
possession amounted to delivery that produced the
legal effect of transferring ownership to Suzuki.39
On the other hand, although Orion claims priority in
right under the principle of prius tempore, potior jure
(i.e.,first in time, stronger in right), it failedto prove the
existence and due execution of the Dacion en Pagoin
its favor.
At the outset, Orion offered the Dacion en Pagoas
Exhibit "5"with submarkings "5-a" to "5-c" to prove
the existence of the February 6, 2003 transaction in its
Formal Offer dated July 20, 2008. Orion likewise
offered in evidence the supposed promissory note
dated September 4, 2002 as Exhibit "12"to prove the
existence of the additional ₱800,000.00 loan. The RTC,
however, denied the admission of Exhibits "5" and
"12,"among others, in its order dated August 19, 2008
"since the same [were] not identified in court by any
witness."40
Despite the exclusion of its most critical documentary
evidence, Orion failed to make a tender ofexcluded
evidence, as provided under Section 40, Rule 132 of
the Rules of Court. For this reason alone, we are
prevented from seriously considering Exhibit "5" and
its submarkings and Exhibit "12" in the present
petition.
Moreover, even if we consider Exhibit "5" and its
submarkings and Exhibit "12" in the present petition,
the copious inconsistencies and contradictions in the
testimonial and documentary evidence of Orion,
militate against the conclusion that the Dacion en
Pagowas duly executed. First, there appears to be no
due and demandable obligation when the Dacion en
Pago was executed, contrary to the allegations of
Orion. Orion’s witness Perez tried to impress upon the
RTC that Kang was in default in his ₱1,800,000.00
loan. During his direct examination, he stated:
ATTY. CRUZAT:
Q: Okay, so this loan of ₱1.8 million, what
happened to this loan, Mr. Witness?
A: Well it became past due, there has been
delayed interest payment by Mr. Kangand...
Q: So what did you do after there were
defaults[?]
A: We have to secure the money or the
investment of the bank through loans and we
have executed a dacion en pagobecause Mr.
Kang said he has no money. So we just
execute[d] the dacion en pago rather than
going through the Foreclosure proceedings.
xxxx
Q: Can you tell the court when was this
executed?
A: February 6, 2003, your Honor.41
A reading of the supposed promissory note, however,
shows that there was nodefault to speak of when the
supposed Dacion en Pagowas executed.
Based on the promissory note, Kang’s loan obligation
wouldmature only on August 27, 2003. Neither can
Orion claim that Kang had been in default in his
installment payments because the wordings of the
promissory note provide that "[t]he principal of this
loanand its interest and other charges shall be paid by
me/us in accordance hereunder: SINGLE PAYMENT
LOANS.42 "There was thus no due and demandable
loan obligation when the alleged Dacion en Pago was
executed.
Second, Perez, the supposed person who prepared the
Dacion en Pago,appears to only have a vague idea of
the transaction he supposedly prepared. During his
cross-examination, he testified:
ATTY. DE CASTRO:
Q: And were you the one who prepared this
[dacion en pago] Mr. witness?
A: Yes, sir. I personally prepared this.
xxxx
Q: So this 1.8 million pesos is already inclusive
of all the penalties, interest and surcharge due
from Mr. Yung Sam Kang?
A: It’s just the principal, sir.
Q: So you did not state the interest [and]
penalties?
A: In the [dacion en pago], we do not include
interest, sir. We may actually includethat
but....
Q: Can you read the Second Whereas Clause,
Mr. Witness?
A: Whereas the first party failed to pay the
said loan to the second party and as of
February 10, 2003, the outstanding obligation
which is due and demandable principal and
interest and other charges included amounts
to ₱1,800,000.00 pesos, sir.
xxxx
Q: You are now changing your answer[.] [I]t
now includes interest and other charges,
based on this document?
A: Yes, based on that document, sir.43
Third, the Dacion en Pago,mentioned that the
₱1,800,000.00 loan was secured by a real
estate mortgage. However, no document was
ever presented to prove this real estate
mortgage aside from it being mentioned in the
Dacion en Pago itself.
245
 ATTY. DE CASTRO:
Q: Would you know if there is any other
document like a supplement to that Credit
Line Agreement referring to this 1.8 million
peso loan by Mr. Yung Sam Kang which says
that there was a subsequent collateralization
or security given by Mr. Yung [Sam]
Kang for the loan?
xxxx
A: The [dacion en pago], sir.44
Fourth,the Dacion en Pago was first mentioned only
two (2) months after Suzuki and Samin demanded the
delivery of the titles sometime in August 2003,and
after Suzuki caused the annotation of his affidavit of
adverse claim. Records show that it was only on
October 9, 2003, when Orion, through its counsel,
Cristobal Balbin Mapile & Associates first spoke of the
Dacion en Pago.45 Not even Perez mentioned any
Dacion en Pago on October 1, 2003, when he
personally received a letter demanding the delivery of
the titles.Instead, Perez refused to accept the letter
and opted to first consult with his lawyer.46
Notably, even the October 9, 2003 letter contained
material inconsistencies in its recital of facts
surrounding the execution of the Dacion en Pago. In
particular, it mentioned that "on [September 4, 2002],
after paying the original loan, [Kang] applied and was
granted a new Credit Line Facility by [Orion] x x x for
ONE MILLION EIGHT HUNDRED THOUSAND PESOS
(₱1,800,000.00)." Perez, however, testified that there
was "no cash movement" in the original ₱1,000,000.00
loan. In his testimony, he said:
COURT:
xxxx
Q: Would you remember what was the subject
matter of that real estate mortgage for that
first ₱1,000,000.00 loan?
A: It’s a condominium Unit in Cityland, sir.
xxxx
Q: Would you recall if there was any payment
by Mr. Yung Sam Kang of this ₱1,000,000.00
loan?
A: None sir.
Q: No payments?
A: None sir.
Q: And from 1999 to 2002, there was no
payment, either by way of payment to the
principal, by way ofpayment of interest, there
was no payment by Mr. Yung Sam Kang of this
loan?
A: Literally, there was no actual cash
movement, sir.
Q: There was no actual cash?
A: Yes, sir.
Q: And yet despite no payment, the bank
Orion Savings Bank still extended an
₱800,000.00 additional right?
A: Yes, sir.47
Fifth, it is undisputed that notwithstanding the
supposed execution of theDacion en Pago on February
2, 2003, Kang remained in possession of the
condominium unit. In fact, nothing in the records
shows that Orion even bothered to take possession of
the property even six (6) months after the supposed
date of execution of the Dacion en Pago. Kang was
even able to transfer possession of the condominium
unit to Suzuki, who then made immediate
improvements thereon. If Orion really purchased the
condominium unit on February 2, 2003 and claimed to
be its true owner, why did it not assert its ownership
immediately after the alleged sale took place? Why did
it have to assert its ownership only after Suzuki
demanded the delivery of the titles? These gaps have
remained unanswered and unfilled.
In Suntay v. CA,48 we held that the most prominent
index of simulation is the complete absence of
anattempt on the part of the vendee to assert his
rights of ownership over the property in question.
After the sale, the vendee should have entered the land
and occupied the premises. The absence of any
attempt on the part of Orion to assert its right of
dominion over the property allegedly soldto it is a
clear badge of fraud. That notwithstanding the
execution of the Dacion en Pago, Kang remained in
possession of the disputed condominium unit – from
the time of the execution of the Dacion en Pagountil
the property’s subsequent transfer to Suzuki –
unmistakably strengthens the fictitious nature of the
Dacion en Pago.
These circumstances, aside from the glaring
inconsistencies in the documents and testimony of
Orion’s witness, indubitably prove the spurious nature
of the Dacion en Pago.
The fact that the Dacion en Pago
is a notarized document does not
support the conclusion that the
sale it embodies is a true
conveyance
Public instruments are evidence of the facts that gave
rise to their execution and are to be considered as
containing all the terms of the agreement.49 While a
notarized document enjoys this presumption, "the fact
that a deed is notarized is not a guarantee of the
validity of its contents."50 The presumption of
regularity of notarized documents is not absolute and
may be rebutted by clear and convincing evidence to
the contrary.51
246
In the present case, the presumption cannot apply SO ORDERED.
because the regularity in the execution of the Dacion
en Pago and the loan documents was challenged in the ARTURO D. BRION
proceedings below where their prima facievalidity Associate Justice
was overthrown by the highly questionable
circumstances surrounding their execution.52 WE CONCUR:

Effect of the PRA restriction on ANTONIO T. CARPIO

the validity of Suzuki’s title to the Associate Justice
property Chairperson

Orion argues that the PRA restriction in CCT No.

18186 affects the conveyance to Suzuki. In particular, MARIANO C. DEL JOSE CATRAL
Orion assails the status of Suzuki as a purchaser in CASTILLO MENDOZA
good faith in view of the express PRA restriction Associate Justice Associate Justice
contained in CCT No. 18186.53
MARVIC M.V.F. LEONEN
We reject this suggested approachoutright because, to Associate Justice
our mind, the PRA restriction cannot affect the
conveyance in favor of Suzuki. On this particular point, CERTIFICATION
we concur withthe following findings of the CA:
Pursuant to Section 13, Article VIII of the Constitution,
x x x the annotation merely servesas a warning to the I certify that the conclusions in the above Decision had
owner who holds a Special Resident Retiree’s been reached in consultation before the case was
Visa(SRRV) that he shall lose his visa if he disposes his assigned to the writer of the opinion of the Court's
property which serves as his investment in order to Division.
qualify for such status. Section 14 of the Implementing
Investment Guidelines under Rule VIII-A of the Rules ANTONIO T. CARPIO
and Regulations Implementing Executive Order No. Acting Chief Justice
1037, Creating the Philippine Retirement Park System
Providing Funds Therefor and For Other Purpose (
otherwise known as the Philippine Retirement
Authority) states:
Footnotes
Section 14. Should the retiree-investor withdraw his
investment from the Philippines, or transfer the same 1 Rollo, pp. 8-31.
to another domestic enterprise, orsell, convey or
transfer his condominium unit or units to another
person, natural or juridical without the prior approval
2Id. at 35-51; penned by Associate Justice
of the Authority, the Special Resident Retiree’s Visa Agnes Reyes-Carpio, with Associate Justices
issued to him, and/or unmarried minor child or Rosalinda Asuncion-Vicente and Priscilla J.
children[,] may be cancelled or revoked by the Baltazar-Padilla, concurring.
Philippine Government, through the appropriate
government department or agency, upon 3 Id. at 53-55.
recommendation of the Authority.54
4 Records, Vol. I, pp. 257-258.
Moreover, Orion should not be allowed to successfully
assail the good faith of Suzuki on the basis of the PRA 5 Id. at 259-260.
restriction. Orion knew of the PRA restriction when it
transacted with Kang. Incidentally, Orion admitted 6 Id. at 250.
accommodating Kang’s request to cancel the mortgage
annotation despite the lack of payment to circumvent 7 Id. at 251.
the PRA restriction. Orion, thus, is estopped from
impugning the validity of the conveyance in favor of
Suzuki on the basis of the PRA restriction that Orion
8 Id. at 252.
itself ignored and "attempted" to circumvent.
9 Id. at 253-254.
With the conclusion that Orion failed to prove the
authenticity of the Dacion en Pago, we see no reason 10 Id. at 270
for the application of the rules on double sale under
Article 1544 of the New Civil Code. Suzuki, moreover, 11 Id. at 271.
successfully adduced sufficient evidence to establish
the validity of conveyance in his favor. 12 Id. at 262.

WHEREFORE, premises considered, we DENY the 13 Id. at 263-264.

petition for lack of merit. Costs against petitioner
Orion Savings Bank. 14 Id. at 92-135.

247
15 Id. at 8-31.
16 Id. at 65-89.
17 Id.
18Century Iron Works, Inc. v. Banas, G.R. No.
184116, June 19, 2013, 699 SCRA 157, 166.
19 Luna v. Linatoc, 74 Phil. 15 (1942). See also
New City Builders, Inc. v. NLRC, 499 Phil. 207,
212-213 (2005), citing Insular Life Assurance
Company, Ltd. v. CA, G.R. No. 126850, April 28,
2004, 401 SCRA 79, the Supreme Court
recognized several exceptions to this rule, to
wit: "(1) when the findings are grounded
entirely on speculation, surmises or
conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible;
(3) when there is grave abuse of discretion;
(4) when the judgment is based on a
misapprehension of facts; (5) when the
findings of facts are conflicting; (6) when in
making its findings the Court of Appeals went
beyond the issues of the case, or its findings
are contrary to the admissions of both the
appellant and the appellee; (7) when the
findings are contrary to the trial court; (8)
when the findings are conclusions without
citation of specific evidence on which they are
based; (9) when the facts set forth in the
petition as well as in the petitioner’s main and
reply briefs are not disputed by the
respondent; (10) when the findings of fact are
premised on the supposed absence of
evidence and contradicted by the evidence on
record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts
not disputed by the parties, which, if properly
considered, would justify a different
conclusion."
20Hubert Nuñez v. SLTEAS Phoenix Solutions,
Inc., G.R. No. 180542, April 12, 2010, 368
SCRA 134, 145.
21 Agpalo, Ruben E., Conflict of Laws, 2004 Ed.,
p. 182.
22Salonga, Jovito R., Private International
Law, 1995 Ed., p. 132, citing Wolff 515.
23 Agpalo, Ruben E., Conflict of Laws, 2004 Ed.,
p. 183.
24 Id.
25 Id.
26Family Code of the Philippines, Art. 80. In
the absence of a contrary stipulation in a
marriage settlement, the property relations of
the spouses shall be governed by Philippine
laws, regardless of the place of the celebration
of the marriage and their residence.
This rule shall not apply:
(1) Where both spouses are aliens;
(2) With respect to the extrinsic
validity of contracts affecting
property not situated in the
Philippines and executed in the
country where the property is
located; and
(3) With respect to the extrinsic
validity of contracts entered into in
the Philippines but affecting property
situated in a foreign country whose
laws require different formalities for
its extrinsic validity.
27ATCI Overseas Corporation v. Echin, G.R.
No. 178551, October 11, 2010, 632 SCRA 528,
534.
28 Id.
29 Rollo, pp. 57-58.
30 Id.
31 Supranote 26.
32Stuart v. Yatco, 114 Phil. 1083, 1084-1085
(1962); Magallon v. Montejo, 230 Phil. 366,
377 (1986).
33 Bucoy v. Paulino, 131 Phil. 790 (1968).
34 See Mendoza v. Reyes, 209 Phil. 120 (1983).
35 Records, Vol. I, pp. 213-214.
36 Id. at 291.
37 TSN, February 28, 2005, pp. 29-36.
38 NEW CIVIL CODE, Article 1458.
39 Id., Article 1496 in relation to Article 1498.
40 Records, Vol. II, p. 395.
41TSN, June 1, 2007, pp. 32-33, emphasis
supplied.
42Records, Vol. II, p. 369. In fact, so important
was the single payment arrangement that
Orion only allowed installment payments
upon additional payment of Two Percent
(2.00%) per annum service fee and a written
notice to Orion of not less than thirty(30) days
prior to the proposed payment.
43TSN, December 17, 2007, pp. 29-32,
emphasis supplied.
44 Id. at. 22.
45 Records, Vol. II, pp. 371-372.
248
 46 Records, Vol. I, pp. 263-267.
47TSN, December 17, 2007, pp. 14-16,
emphasis supplied.
48 321 Phil. 809, 831-832 (1995).
49Bough v. Cantiveros, 40 Phil. 209, 215
(1919).
50Nazareno v. Court of Appeals, 397 Phil. 707,
725 (2000);San Juan v. Offril, G.R. No. 154609,
April 24, 2009, 586 SCRA 439, 445-446.
51Lazaro v. Agustin, G.R. No. 152364, April 15,
2010, 618 SCRA 298, 309; Potenciano v.
Reynoso, 449 Phil. 396, 406 (2003).
52 San Juan v. Offril, supra note 50.
53 Entry No. 73321/C-10186-RESTRICTIONS:
IN an instrument duly subscribed and sworn
to, VERNETTE UMALI-PACO, CESO II, Phil.
Retirement Authority, states that the property
described herein is subject to the following
restriction: "The sale, transfer, or
encumbrance of this property is subject to the
approval of the Philippine Retirement
Authority, the owner-named herein being a
holder of Special Resident Retiree’s Visa
(SRRV), and is therefore, subject to the
provision of Executive Order No. 1037 and
it0`s implementing Rules and Regulations."
(Doc. No. 68, p. 14, Bk.XIV, s. of 2000 of Not.
Pub. For Mand. *City, Eddie Fernandez, dated
June 23, 2000.) Date of Inscription-June 23,
2000-1:33 p.m.
54 Rollo, p. 47.
The Lawphil Project - Arellano Law Foundation
Enforcement of Foreign Judgment or Final Order
1. Mijares v. Rañada, April 12, 2005
2. BPI Securities v. Guevara, March 11, 2015
G.R. No. 139325. April 12, 2005]
PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES,
HILDA B. NARCISO, SR. MARIANI
DIMARANAN, SFIC, and JOEL C. LAMANGAN
in their behalf and on behalf of the Class
Plaintiffs in Class Action No. MDL 840,
United States District Court of
Hawaii, petitioners, vs. HON. SANTIAGO
JAVIER RANADA, in his capacity as
Presiding Judge of Branch 137, Regional
Trial Court, Makati City, and the ESTATE
OF FERDINAND E. MARCOS, through its
court appointed legal representatives in
Class Action MDL 840, United States
District Court of Hawaii, namely: Imelda R.
Marcos and Ferdinand Marcos,
Jr., respondents.
DECISION
TINGA, J.:
Our martial law experience bore strange
unwanted fruits, and we have yet to finish weeding out
its bitter crop. While the restoration of freedom and
the fundamental structures and processes of
democracy have been much lauded, according to a
significant number, the changes, however, have not
sufficiently healed the colossal damage wrought under
the oppressive conditions of the martial law period.
The cries of justice for the tortured, the murdered, and
the desaparecidos arouse outrage and sympathy in the
hearts of the fair-minded, yet the dispensation of the
appropriate relief due them cannot be extended
through the same caprice or whim that characterized
the ill-wind of martial rule. The damage done was not
merely personal but institutional, and the proper
rebuke to the iniquitous past has to involve the award
of reparations due within the confines of the restored
rule of law.
The petitioners in this case are prominent victims
of human rights violations[1] who, deprived of the
opportunity to directly confront the man who once
held absolute rule over this country, have chosen to do
battle instead with the earthly representative, his
estate. The clash has been for now interrupted by a
trial court ruling, seemingly comported to legal logic,
that required the petitioners to pay a whopping filing
fee of over Four Hundred Seventy-Two Million Pesos
(P472,000,000.00) in order that they be able to
enforce a judgment awarded them by a foreign court.
There is an understandable temptation to cast the
struggle within the simplistic confines of a morality
tale, and to employ short-cuts to arrive at what might
seem the desirable solution. But easy, reflexive resort
to the equity principle all too often leads to a result
that may be morally correct, but legally wrong.
Nonetheless, the application of the legal
principles involved in this case will comfort those who
maintain that our substantive and procedural laws, for
all their perceived ambiguity and susceptibility to
myriad interpretations, are inherently fair and just.
The relief sought by the petitioners is expressly
mandated by our laws and conforms to established
legal principles. The granting of this petition for
certiorari is warranted in order to correct the legally
infirm and unabashedly unjust ruling of the
respondent judge.
The essential facts bear little elaboration. On 9
May 1991, a complaint was filed with the United States
District Court (US District Court), District of Hawaii,
against the Estate of former Philippine President
Ferdinand E. Marcos (Marcos Estate). The action was
brought forth by ten Filipino citizens[2] who each
alleged having suffered human rights abuses such as
arbitrary detention, torture and rape in the hands of
police or military forces during the Marcos
regime.[3] The Alien Tort Act was invoked as basis for
the US District Courts jurisdiction over the complaint,
as it involved a suit by aliens for tortious violations of
249
international law.[4] These plaintiffs brought the action
on their own behalf and on behalf of a class of
similarly situated individuals, particularly consisting
of all current civilian citizens of the Philippines, their
heirs and beneficiaries, who between 1972 and 1987
were tortured, summarily executed or had
disappeared while in the custody of military or
paramilitary groups. Plaintiffs alleged that the class
consisted of approximately ten thousand (10,000)
members; hence, joinder of all these persons was
impracticable.
The institution of a class action suit was
warranted under Rule 23(a) and (b)(1)(B) of the US
Federal Rules of Civil Procedure, the provisions of
which were invoked by the plaintiffs. Subsequently,
the US District Court certified the case as a class action
and created three (3) sub-classes of torture, summary
execution and disappearance victims.[5] Trial ensued,
and subsequently a jury rendered a verdict and an
award of compensatory and exemplary damages in
favor of the plaintiff class. Then, on 3 February 1995,
the US District Court, presided by Judge Manuel L.
Real, rendered a Final Judgment (Final
Judgment) awarding the plaintiff class a total of One
Billion Nine Hundred Sixty Four Million Five Thousand
Eight Hundred Fifty Nine Dollars and Ninety Cents
($1,964,005,859.90). The Final Judgment was
eventually affirmed by the US Court of Appeals for the
Ninth Circuit, in a decision rendered on 17 December
1996.[6]
On 20 May 1997, the present petitioners
filed Complaint with the Regional Trial Court, City of
Makati (Makati RTC) for the enforcement of the Final
Judgment. They alleged that they are members of the
plaintiff class in whose favor the US District Court
awarded damages.[7] They argued that since the
Marcos Estate failed to file a petition for certiorari
with the US Supreme Court after the Ninth Circuit
Court of Appeals had affirmed the Final Judgment, the
decision of the US District Court had become final and
executory, and hence should be recognized and
enforced in the Philippines, pursuant to Section 50,
Rule 39 of the Rules of Court then in force.[8]
On 5 February 1998, the Marcos Estate filed a
motion to dismiss, raising, among others, the non-
payment of the correct filing fees. It alleged that
petitioners had only paid Four Hundred Ten Pesos
(P410.00) as docket and filing fees, notwithstanding
the fact that they sought to enforce a monetary
amount of damages in the amount of over Two and a
Quarter Billion US Dollars (US$2.25 Billion). The
Marcos Estate cited Supreme Court Circular No. 7,
pertaining to the proper computation and payment of
docket fees. In response, the petitioners claimed that
an action for the enforcement of a foreign judgment is
not capable of pecuniary estimation; hence, a filing fee
of only Four Hundred Ten Pesos (P410.00) was
proper, pursuant to Section 7(c) of Rule 141.[9]
On 9 September 1998, respondent Judge Santiago
Javier Ranada[10] of the Makati RTC issued the
subject Order dismissing the complaint without
prejudice. Respondent judge opined that contrary to
the petitioners submission, the subject matter of the
complaint was indeed capable of pecuniary estimation,
as it involved a judgment rendered by a foreign court
ordering the payment of definite sums of money,
allowing for easy determination of the value of the
foreign judgment. On that score, Section 7(a) of Rule
141 of the Rules of Civil Procedure would find
application, and the RTC estimated the proper amount
of filing fees was approximately Four Hundred
Seventy Two Million Pesos, which obviously had not
been paid.
Not surprisingly, petitioners filed a Motion for
Reconsideration, which Judge Ranada denied in
an Order dated 28 July 1999. From this denial,
petitioners filed a Petition for Certiorari under Rule 65
assailing the twin orders of respondent judge.[11] They
prayed for the annulment of the questioned orders,
and an order directing the reinstatement of Civil Case
No. 97-1052 and the conduct of appropriate
proceedings thereon.
Petitioners submit that their action is incapable
of pecuniary estimation as the subject matter of the
suit is the enforcement of a foreign judgment, and not
an action for the collection of a sum of money or
recovery of damages. They also point out that to
require the class plaintiffs to pay Four Hundred
Seventy Two Million Pesos (P472,000,000.00) in filing
fees would negate and render inutile the liberal
construction ordained by the Rules of Court, as
required by Section 6, Rule 1 of the Rules of Civil
Procedure, particularly the inexpensive disposition of
every action.
Petitioners invoke Section 11, Article III of the
Bill of Rights of the Constitution, which provides that
Free access to the courts and quasi-judicial bodies and
adequate legal assistance shall not be denied to any
person by reason of poverty, a mandate which is
essentially defeated by the required exorbitant filing
fee. The adjudicated amount of the filing fee, as arrived
at by the RTC, was characterized as indisputably
unfair, inequitable, and unjust.
The Commission on Human Rights (CHR) was
permitted to intervene in this case.[12] It urged that the
petition be granted and a judgment rendered, ordering
the enforcement and execution of the District Court
judgment in accordance with Section 48, Rule 39 of the
1997 Rules of Civil Procedure. For the CHR, the Makati
RTC erred in interpreting the action for the execution
of a foreign judgment as a new case, in violation of the
principle that once a case has been decided between
the same parties in one country on the same issue with
finality, it can no longer be relitigated again in another
country.[13] The CHR likewise invokes the principle of
comity, and of vested rights.
The Courts disposition on the issue of filing fees
will prove a useful jurisprudential guidepost for courts
confronted with actions enforcing foreign judgments,
particularly those lodged against an estate. There is no
basis for the issuance a limited pro hac vice ruling
based on the special circumstances of the petitioners
as victims of martial law, or on the emotionally-
charged allegation of human rights abuses.
An examination of Rule 141 of the Rules of Court
readily evinces that the respondent judge ignored the
clear letter of the law when he concluded that the
filing fee be computed based on the total sum claimed
or the stated value of the property in litigation.
In dismissing the complaint, the respondent
judge relied on Section 7(a), Rule 141 as basis for the
computation of the filing fee of over P472 Million. The
provision states:
250
SEC. 7. Clerk of Regional Trial Court.-
(a) For filing an action or a permissive
counterclaim or money claim against an
estate not based on judgment, or for filing
with leave of court a third-party, fourth-party,
etc., complaint, or a complaint in intervention,
and for all clerical services in the same time, if
the total sum claimed, exclusive of interest, or
the started value of the property in litigation,
is:
1. Less than P 100,00.00 P 500.00
2. P 100,000.00 or more - P 800.00
but less than P 150,000.00
3. P 150,000.00 or more but - P 1,000.00
less than P 200,000.00
4. P 200,000.00 or more but
less than P 250,000.00 - P 1,500.00
5. P 250,000.00 or more but
less than P 300,00.00 - P 1,750.00
6. P 300,000.00 or more but
not more than P 400,000.00 -
P 2,000.00
7. P 350,000.00 or more but not
more than P400,000.00 - P 2,250.00
8. For each P 1,000.00 in excess of
P 400,000.00 - P 10.00
...
(Emphas
is
supplied
) the US District Court involves any real property of the
Obviously, the above-quoted provision covers, on
one hand, ordinary actions, permissive counterclaims,
third-party, etc. complaints and complaints-in-
interventions, and on the other, money claims against
estates which are not based on judgment. Thus, the
relevant question for purposes of the present petition
is whether the action filed with the lower court is a
money claim against an estate not based on judgment.
Petitioners complaint may have been lodged
against an estate, but it is clearly based on a judgment,
the Final Judgment of the US District Court. The
provision does not make any distinction between a
local judgment and a foreign judgment, and where the
law does not distinguish, we shall not distinguish.
A reading of Section 7 in its entirety reveals
several instances wherein the filing fee is computed on
the basis of the amount of the relief sought, or on the
value of the property in litigation. The filing fee for
requests for extrajudicial foreclosure of mortgage is
based on the amount of indebtedness or the
mortgagees claim.[14] In special proceedings involving
properties such as for the allowance of wills, the filing
fee is again based on the value of the property.[15]The
aforecited rules evidently have no application to
petitioners complaint.
Petitioners rely on Section 7(b), particularly the
proviso on actions where the value of the subject
matter cannot be estimated. The provision reads in
full:
SEC. 7. Clerk of Regional Trial Court.-
(b) For filing
1. Actions where the value
of the subject
matter
cannot be
estimated --- P 600.00
2. Special civil actions except
judicial foreclosure
which
shall be governed
by
paragraph (a)
above --- P 600.00
3. All other actions not
involving property ---
P 600.00
In a real action, the assessed value of the property, or
if there is none, the estimated value, thereof shall be
alleged by the claimant and shall be the basis in
computing the fees.
It is worth noting that the provision also provides
that in real actions, the assessed value or estimated
value of the property shall be alleged by the claimant
and shall be the basis in computing the fees. Yet again,
this provision does not apply in the case at bar. A real
action is one where the plaintiff seeks the recovery of
real property or an action affecting title to or recovery
of possession of real property.[16] Neither the
complaint nor the award of damages adjudicated by
Marcos Estate.
Thus, respondent judge was in clear and serious
error when he concluded that the filing fees should be
computed on the basis of the schematic table of
Section 7(a), as the action involved pertains to a claim
against an estate based on judgment. What provision,
if any, then should apply in determining the filing fees
for an action to enforce a foreign judgment?
To resolve this question, a proper understanding
is required on the nature and effects of a foreign
judgment in this jurisdiction.
The rules of comity, utility and convenience of
nations have established a usage among civilized
states by which final judgments of foreign courts of
competent jurisdiction are reciprocally respected and
rendered efficacious under certain conditions that
may vary in different countries.[17] This principle was
prominently affirmed in the leading American case
of Hilton v. Guyot[18] and expressly recognized in our
jurisprudence beginning with Ingenholl v. Walter E.
Olsen & Co.[19] The conditions required by the
Philippines for recognition and enforcement of a
foreign judgment were originally contained in Section
311 of the Code of Civil Procedure, which was taken
from the California Code of Civil Procedure which, in
turn, was derived from the California Act of March 11,
1872.[20] Remarkably, the procedural rule now
outlined in Section 48, Rule 39 of the Rules of Civil
Procedure has remained unchanged down to the last
word in nearly a century. Section 48 states:
251
SEC. 48. Effect of foreign judgments. The effect of a
judgment of a tribunal of a foreign country, having
jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the
judgment is conclusive upon the title to the thing;
(b) In case of a judgment against a person, the
judgment is presumptive evidence of a right as
between the parties and their successors in interest by
a subsequent title;
In either case, the judgment or final order may be
repelled by evidence of a want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of
law or fact.
There is an evident distinction between a foreign
judgment in an action in rem and one in personam. For
an action in rem, the foreign judgment is deemed
conclusive upon the title to the thing, while in an
action in personam, the foreign judgment
presumptive, and not conclusive, of a right as between
the parties and their successors in interest by a
subsequent title.[21] However, in both cases, the foreign
judgment is susceptible to impeachment in our local
courts on the grounds of want of jurisdiction or notice
to the party,[22] collusion, fraud,[23]or clear mistake of
law or fact.[24] Thus, the party aggrieved by the foreign
judgment is entitled to defend against the enforcement
of such decision in the local forum. It is essential that
there should be an opportunity to challenge the
foreign judgment, in order for the court in this
jurisdiction to properly determine its efficacy.[25]
It is clear then that it is usually necessary for an
action to be filed in order to enforce a foreign
judgment[26], even if such judgment has conclusive
effect as in the case of in rem actions, if only for the
purpose of allowing the losing party an opportunity to
challenge the foreign judgment, and in order for the
court to properly determine
efficacy.[27] Consequently, the party attacking a foreign
judgment has the burden of overcoming the
presumption of its validity.[28]
The rules are silent as to what initiatory
procedure must be undertaken in order to enforce a
foreign judgment in the Philippines. But there is no
question that the filing of a civil complaint is an
appropriate measure for such purpose. A civil action is
one by which a party sues another for the enforcement
or protection of a right,[29] and clearly an action to
enforce a foreign judgment is in essence a vindication
of a right prescinding either from a conclusive
judgment upon title or the presumptive evidence of a
right.[30] Absent perhaps a statutory grant of
jurisdiction to a quasi-judicial body, the claim for
enforcement of judgment must be brought before the
regular courts.[31]
There are distinctions, nuanced but discernible,
between the cause of action arising from the
enforcement of a foreign judgment, and that arising
from the facts or allegations that occasioned the
foreign judgment. They may pertain to the same set of
facts, but there is an essential difference in the right-
duty correlatives that are sought to be vindicated. For
example, in a complaint for damages against a
tortfeasor, the cause of action emanates from the
violation of the right of the complainant through the
act or omission of the respondent. On the other hand,
in a complaint for the enforcement of a foreign
judgment awarding damages from the same
tortfeasor, for the violation of the same right through
the same manner of action, the cause of action derives
not from the tortious act but from the foreign
judgment itself.
More importantly, the matters for proof are
different. Using the above example, the complainant
will have to establish before the court the tortious act
or omission committed by the tortfeasor, who in turn
is allowed to rebut these factual allegations or prove
extenuating circumstances. Extensive litigation is thus
conducted on the facts, and from there the right to and
amount of damages are assessed. On the other hand, in
an action to enforce a foreign judgment, the matter left
for proof is the foreign judgment itself, and not the
facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable
issues are generally restricted to a review of
jurisdiction of the foreign court, the service of
is
personal notice, collusion, fraud, or mistake of fact or
law. The limitations on review is in consonance with a
strong and pervasive policy in all legal systems to limit
repetitive litigation on claims and issues.[32] Otherwise
known as the policy of preclusion, it seeks to protect
party expectations resulting from previous litigation,
to safeguard against the harassment of defendants, to
insure that the task of courts not be increased by
never-ending litigation of the same disputes, and in a
larger sense to promote what Lord Coke in the Ferrers
Case of 1599 stated to be the goal of all law: rest and
quietness.[33] If every judgment of a foreign court were
reviewable on the merits, the plaintiff would be forced
back on his/her original cause of action, rendering
immaterial the previously concluded litigation.[34]
Petitioners appreciate this distinction, and rely
upon it to support the proposition that the subject
matter of the complaintthe enforcement of a foreign
judgmentis incapable of pecuniary estimation.
its
Admittedly the proposition, as it applies in this case, is
counter-intuitive, and thus deserves strict scrutiny.
For in all practical intents and purposes, the matter at
hand is capable of pecuniary estimation, down to the
last cent. In the assailed Order, the respondent judge
pounced upon this point without equivocation:
The Rules use the term where the value of the subject
matter cannot be estimated. The subject matter of the
present case is the judgment rendered by the foreign
court ordering defendant to pay plaintiffs definite
sums of money, as and for compensatory damages.
The Court finds that the value of the foreign judgment
can be estimated; indeed, it can even be easily
determined. The Court is not minded to distinguish
between the enforcement of a judgment and the
amount of said judgment, and separate the two, for
purposes of determining the correct filing fees.
Similarly, a plaintiff suing on promissory note for P1
million cannot be allowed to pay only P400 filing
fees (sic), on the reasoning that the subject matter of
his suit is not the P1 million, but the enforcement of
the promissory note, and that the value of such
enforcement cannot be estimated.[35]
The jurisprudential standard in gauging whether
the subject matter of an action is capable of pecuniary
estimation is well-entrenched. The Marcos Estate
252
cites Singsong v. Isabela Sawmill and Raymundo v.
Court of Appeals, which ruled:
[I]n determining whether an action is one the subject
matter of which is not capable of pecuniary estimation
this Court has adopted the criterion of first
ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a
sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in
the municipal courts or in the courts of first instance
would depend on the amount of the claim. However,
where the basic issue is something other than the right
to recover a sum of money, where the money claim is
purely incidental to, or a consequence of, the principal
relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable
exclusively by courts of first instance (now Regional
Trial Courts).
On the other hand, petitioners cite
the ponencia of Justice JBL Reyes in Lapitan v.
Scandia,[36] from which the rule
in Singsong and Raymundo actually derives, but which
incorporates this additional nuance omitted in the
latter cases:
xxx However, where the basic issue is something other
than the right to recover a sum of money, where the
money claim is purely incidental to, or a consequence
of, the principal relief sought, like in suits to have the
defendant perform his part of the contract
(specific performance) and in actions for support,
or for annulment of judgment or to foreclose a
mortgage, this Court has considered such actions as
cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable
exclusively by courts of first instance.[37]
Petitioners go on to add that among the actions
the Court has recognized as being incapable of
pecuniary estimation include legality of conveyances
and money deposits,[38] validity of a mortgage,[39] the
right to support,[40] validity of
documents,[41] rescission of contracts,[42] specific
performance,[43] and validity or annulment of
judgments.[44] It is urged that an action for
enforcement of a foreign judgment belongs to the
same class.
This is an intriguing argument, but ultimately it is
self-evident that while the subject matter of the action
is undoubtedly the enforcement of a foreign judgment,
the effect of a providential award would be the
adjudication of a sum of money. Perhaps in theory,
such an action is primarily for the enforcement of the
foreign judgment, but there is a certain obtuseness to
that sort of argument since there is no denying that
the enforcement of the foreign judgment will
necessarily result in the award of a definite sum of
money.
But before we insist upon this conclusion past
beyond the point of reckoning, we must examine its
possible ramifications. Petitioners raise the point that
a declaration that an action for enforcement of foreign
judgment may be capable of pecuniary estimation
might lead to an instance wherein a first level court
such as the Municipal Trial Court would have
jurisdiction to enforce a foreign judgment. But under
the statute defining the jurisdiction of first level
courts, B.P. 129, such courts are not vested with
jurisdiction over actions for the enforcement of
foreign judgments.
Sec. 33. Jurisdiction of Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial
Courts in civil cases. Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial
Courts shall exercise:
(1) Exclusive original jurisdiction over civil
actions and probate proceedings, testate and
intestate, including the grant of provisional
remedies in proper cases, where the value of
the personal property, estate, or amount of
the demand does not exceed One hundred
thousand pesos (P100,000.00) or, in Metro
Manila where such personal property,
estate, or amount of the demand does not
exceed Two hundred thousand pesos
(P200,000.00) exclusive of interest damages
of whatever kind, attorney's fees, litigation
expenses, and costs, the amount of which
must be specifically alleged: Provided, That
where there are several claims or causes of
action between the same or different parties,
embodied in the same complaint, the
amount of the demand shall be the totality of
the claims in all the causes of action,
irrespective of whether the causes of action
arose out of the same or different
transactions;
(2) Exclusive original jurisdiction over cases
of forcible entry and unlawful
detainer: Provided, That when, in such cases,
the defendant raises the question of
ownership in his pleadings and the question
of possession cannot be resolved without
deciding the issue of ownership, the issue of
ownership shall be resolved only to
determine the issue of possession.
(3) Exclusive original jurisdiction in all civil
actions which involve title to, or possession
of, real property, or any interest therein
where the assessed value of the property or
interest therein does not exceed Twenty
thousand pesos (P20,000.00) or, in civil
actions in Metro Manila, where such
assessed value does not exceed Fifty
thousand pesos (P50,000.00) exclusive of
interest, damages of whatever kind,
attorney's fees, litigation expenses and
costs: Provided, That value of such property
shall be determined by the assessed value of
the adjacent lots.[45]
Section 33 of B.P. 129 refers to instances wherein
the cause of action or subject matter pertains to an
assertion of rights and interests over property or a
sum of money. But as earlier pointed out, the subject
matter of an action to enforce a foreign judgment is
the foreign judgment itself, and the cause of action
arising from the adjudication of such judgment.
An examination of Section 19(6), B.P. 129 reveals
that the instant complaint for enforcement of a foreign
judgment, even if capable of pecuniary estimation,
253
would fall under the jurisdiction of the Regional Trial
Courts, thus negating the fears of the petitioners.
Indeed, an examination of the provision indicates that
it can be relied upon as jurisdictional basis with
respect to actions for enforcement of foreign
judgments, provided that no other court or office is
vested jurisdiction over such complaint:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts
shall exercise exclusive original jurisdiction:
xxx
(6) In all cases not within the exclusive jurisdiction of
any court, tribunal, person or body exercising
jurisdiction or any court, tribunal, person or body
exercising judicial or quasi-judicial functions.
Thus, we are comfortable in asserting the
obvious, that the complaint to enforce the US District
Court judgment is one capable of pecuniary
estimation. But at the same time, it is also an action
based on judgment against an estate, thus placing it
beyond the ambit of Section 7(a) of Rule 141. What
provision then governs the proper computation of the
filing fees over the instant complaint? For this case
and other similarly situated instances, we find that it is
covered by Section 7(b)(3), involving as it does, other
actions not involving property.
Notably, the amount paid as docket fees by the
petitioners on the premise that it was an action
incapable of pecuniary estimation corresponds to the
same amount required for other actions not involving
property. The petitioners thus paid the correct amount
of filing fees, and it was a grave abuse of discretion for
respondent judge to have applied instead a clearly
inapplicable rule and dismissed the complaint.
There is another consideration of supreme
relevance in this case, one which should disabuse the
notion that the doctrine affirmed in this decision is
grounded solely on the letter of the procedural rule.
We earlier adverted to the the internationally
recognized policy of preclusion,[46] as well as the
principles of comity, utility and convenience of
nations[47] as the basis for the evolution of the rule
calling for the recognition and enforcement of foreign
judgments. The US Supreme Court in Hilton v.
Guyot[48] relied heavily on the concept of comity, as
especially derived from the landmark treatise of
Justice Story in his Commentaries on the Conflict of
Laws of 1834.[49] Yet the notion of comity has since
been criticized as one of dim contours[50] or suffering
from a number of fallacies.[51] Other conceptual bases
for the recognition of foreign judgments have evolved
such as the vested rights theory or the modern
doctrine of obligation.[52]
There have been attempts to codify through
treaties or multilateral agreements the standards for
the recognition and enforcement of foreign judgments,
but these have not borne fruition. The members of the
European Common Market accede to the Judgments
Convention, signed in 1978, which eliminates as to
participating countries all of such obstacles to
recognition such as reciprocity and rvision au
fond.[53] The most ambitious of these attempts is
the Convention on the Recognition and Enforcement of
Foreign Judgments in Civil and Commercial Matters,
prepared in 1966 by the Hague Conference of
International Law.[54] While it has not received the
ratifications needed to have it take effect,[55] it is
recognized as representing current scholarly thought
on the topic.[56] Neither the Philippines nor the United
States are signatories to the Convention.
Yet even if there is no unanimity as to the
applicable theory behind the recognition and
enforcement of foreign judgments or a universal treaty
rendering it obligatory force, there is consensus that
the viability of such recognition and enforcement is
essential. Steiner and Vagts note:
. . . The notion of unconnected bodies of national law
on private international law, each following a quite
separate path, is not one conducive to the growth of a
transnational community encouraging travel and
commerce among its members. There is a
contemporary resurgence of writing stressing the
identity or similarity of the values that systems of
public and private international law seek to further a
community interest in common, or at least reasonable,
rules on these matters in national legal systems. And
such generic principles as reciprocity play an
important role in both fields.[57]
Salonga, whose treatise on private international
law is of worldwide renown, points out:
Whatever be the theory as to the basis for recognizing
foreign judgments, there can be little dispute that the
end is to protect the reasonable expectations and
demands of the parties. Where the parties have
submitted a matter for adjudication in the court of one
state, and proceedings there are not tainted with
irregularity, they may fairly be expected to submit,
within the state or elsewhere, to the enforcement of
the judgment issued by the court.[58]
There is also consensus as to the requisites for
recognition of a foreign judgment and the defenses
against the enforcement thereof. As earlier discussed,
the exceptions enumerated in Section 48, Rule 39 have
remain unchanged since the time they were adapted in
this jurisdiction from long standing American rules.
The requisites and exceptions as delineated under
Section 48 are but a restatement of generally accepted
principles of international law. Section 98 of The
Restatement, Second, Conflict of Laws, states that a
valid judgment rendered in a foreign nation after a fair
trial in a contested proceeding will be recognized in
the United States, and on its face, the term valid brings
into play requirements such notions as valid
jurisdiction over the subject matter and
parties.[59] Similarly, the notion that fraud or collusion
may preclude the enforcement of a foreign judgment
finds affirmation with foreign jurisprudence and
commentators,[60] as well as the doctrine that the
foreign judgment must not constitute a clear mistake
of law or fact.[61] And finally, it has been recognized
that public policy as a defense to the recognition of
judgments serves as an umbrella for a variety of
concerns in international practice which may lead to a
denial of recognition.[62]
The viability of the public policy defense against
the enforcement of a foreign judgment has been
recognized in this jurisdiction.[63] This defense allows
for the application of local standards in reviewing the
foreign judgment, especially when such judgment
254
creates only a presumptive right, as it does in cases
wherein the judgment is against a person.[64] The
defense is also recognized within the international
sphere, as many civil law nations adhere to a broad
public policy exception which may result in a denial of
recognition when the foreign court, in the light of the
choice-of-law rules of the recognizing court, applied
the wrong law to the case.[65] The public policy defense
can safeguard against possible abuses to the easy
resort to offshore litigation if it can be demonstrated
that the original claim is noxious to our constitutional
values.
There is no obligatory rule derived from treaties
or conventions that requires the Philippines to
recognize foreign judgments, or allow a procedure for
the enforcement thereof. However, generally accepted
principles of international law, by virtue of the
incorporation clause of the Constitution, form part of
the laws of the land even if they do not derive from
treaty obligations.[66] The classical formulation in
international law sees those customary rules accepted
as binding result from the combination two elements:
the established, widespread, and consistent practice
on the part of States; and a psychological element
known as the opinion juris sive necessitates (opinion as
to law or necessity). Implicit in the latter element is a
belief that the practice in question is rendered
obligatory by the existence of a rule of law requiring
it.[67]
While the definite conceptual parameters of the
recognition and enforcement of foreign judgments
have not been authoritatively established, the Court
can assert with certainty that such an undertaking is
among those generally accepted principles of
international law.[68] As earlier demonstrated, there is
a widespread practice among states accepting in
principle the need for such recognition and
enforcement, albeit subject to limitations of varying
degrees. The fact that there is no binding universal
treaty governing the practice is not indicative of a
widespread rejection of the principle, but only a
disagreement as to the imposable specific rules
governing the procedure for recognition and
enforcement.
Aside from the widespread practice, it is
indubitable that the procedure for recognition and
enforcement is embodied in the rules of law, whether
statutory or jurisprudential, adopted in various
foreign jurisdictions. In the Philippines, this is
evidenced primarily by Section 48, Rule 39 of the
Rules of Court which has existed in its current form
since the early 1900s. Certainly, the Philippine legal
system has long ago accepted into its jurisprudence
and procedural rules the viability of an action for
enforcement of foreign judgment, as well as the
requisites for such valid enforcement, as derived from
internationally accepted doctrines. Again, there may
be distinctions as to the rules adopted by each
particular state,[69] but they all prescind from the
premise that there is a rule of law obliging states to
allow for, however generally, the recognition and
enforcement of a foreign judgment. The bare principle,
to our mind, has attained the status of opinio juris in
international practice.
This is a significant proposition, as it
acknowledges that the procedure and requisites
outlined in Section 48, Rule 39 derive their efficacy not
merely from the procedural rule, but by virtue of the
incorporation clause of the Constitution. Rules of
procedure are promulgated by the Supreme
Court,[70] and could very well be abrogated or revised
by the high court itself. Yet the Supreme Court is
obliged, as are all State components, to obey the laws
of the land, including generally accepted principles of
international law which form part thereof, such as
those ensuring the qualified recognition and
enforcement of foreign judgments.[71]
Thus, relative to the enforcement of foreign
judgments in the Philippines, it emerges that there is a
general right recognized within our body of laws, and
affirmed by the Constitution, to seek recognition and
enforcement of foreign judgments, as well as a right to
defend against such enforcement on the grounds of
want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
The preclusion of an action for enforcement of a
foreign judgment in this country merely due to an
exhorbitant assessment of docket fees is alien to
generally accepted practices and principles in
international law. Indeed, there are grave concerns in
conditioning the amount of the filing fee on the
pecuniary award or the value of the property subject
of the foreign decision. Such pecuniary award will
almost certainly be in foreign denomination,
computed in accordance with the applicable laws and
standards of the forum.[72] The vagaries of inflation, as
well as the relative low-income capacity of the
Filipino, to date may very well translate into an award
virtually unenforceable in this country, despite its
integral validity, if the docket fees for the enforcement
thereof were predicated on the amount of the award
sought to be enforced. The theory adopted by
respondent judge and the Marcos Estate may even
lead to absurdities, such as if applied to an award
involving real property situated in places such as the
United States or Scandinavia where real property
values are inexorably high. We cannot very well
require that the filing fee be computed based on the
value of the foreign property as determined by the
standards of the country where it is located.
As crafted, Rule 141 of the Rules of Civil
Procedure avoids unreasonableness, as it recognizes
that the subject matter of an action for enforcement of
a foreign judgment is the foreign judgment itself, and
not the right-duty correlatives that resulted in the
foreign judgment. In this particular circumstance,
given that the complaint is lodged against an estate
and is based on the US District Courts Final Judgment,
this foreign judgment may, for purposes of
classification under the governing procedural rule, be
deemed as subsumed under Section 7(b)(3) of Rule
141, i.e., within the class of all other actions not
involving property. Thus, only the blanket filing fee of
minimal amount is required.
Finally, petitioners also invoke Section 11, Article
III of the Constitution, which states that [F]ree access
to the courts and quasi-judicial bodies and adequate
legal assistance shall not be denied to any person by
reason of poverty. Since the provision is among the
guarantees ensured by the Bill of Rights, it certainly
gives rise to a demandable right. However, now is not
the occasion to elaborate on the parameters of this
constitutional right. Given our preceding discussion, it
is not necessary to utilize this provision in order to
grant the relief sought by the petitioners. It is
axiomatic that the constitutionality of an act will not
255
be resolved by the courts if the controversy can be
settled on other grounds[73] or unless the resolution
thereof is indispensable for the determination of the
case.[74]
One more word. It bears noting that Section 48,
Rule 39 acknowledges that the Final Judgment is not
conclusive yet, but presumptive evidence of a right of
the petitioners against the Marcos Estate. Moreover,
the Marcos Estate is not precluded to present
evidence, if any, of want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or
fact. This ruling, decisive as it is on the question of
filing fees and no other, does not render verdict on the
enforceability of the Final Judgment before the courts
under the jurisdiction of the Philippines, or for that
matter any other issue which may legitimately be
presented before the trial court. Such issues are to be
litigated before the trial court, but within the confines
of the matters for proof as laid down in Section 48,
Rule 39. On the other hand, the speedy resolution of
this claim by the trial court is encouraged, and
contumacious delay of the decision on the merits will
not be brooked by this Court.
WHEREFORE, the petition is GRANTED. The
assailed orders are NULLIFIED and SET ASIDE, and a
new order REINSTATING Civil Case No. 97-1052 is
hereby issued. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo,
Sr., and Chico-Nazario, JJ., concur.
[1] Priscilla Mijares is a judge of the Regional Trial
Court of Pasay, Loretta Ann P. Rosales an
incumbent member of the House of
Representatives, and Joel Lamangan a noted
film director.
[2] Namely Celsa Hilao, Josefina Hilao Forcadilla, Arturo
P. Revilla, Jr., Rodolfo G. Benosa, Danila M.
Fuente, Renato Pineda, Domiciano Amparo,
Chistopher Sorio, Jose Duran, and Adora Faye
De Vera. Rollo, pp. 42-47.
[3] Except for Celsa Hilao, who instead alleged that her
daughter, Liliosa Hilao, had been tortured
then executed by military personnel during
martial law. Id. at 42-43.
[4] Id. at 42.
[5] Id. at 35.
[6] The Opinion was authored by Circuit Judge Betty B.
Fletcher and concurred in by Circuit Judge
Harry Pragerson. Circuit Judge Pamela Ann
Rymer filed an opinion concurring and
dissenting in part, her dissent centering on
the methodology used for computing
compensatory damages. Rollo, pp. 84-132.
[7] Under Section 58 of the US Federal Rules of Civil
Procedure, the judgment for compensatory
damages in a class suit is awarded to a
randomly selected. Petitioner Joel Lamangan
was among the randomly selected claimants
of the Torture subclass awarded damages by
the US District Court. See Rollo, p. 71.
[8] Now Section 48, Rule 39, 1997 Rules of Civil
Procedure.
[9] Since increased to P600.00.
[10] Now an Associate Justice of the Court of Appeals.
[11] Petitioners correctly note that they are precluded
from filing an appeal on certiorari under
Section 1, Rule 41 of the Rules of Civil
Procedure, which bars an appeal taken from
an order dismissing an action without
prejudice and dictates the aggrieved party to
file an appropriate civil action under Rule 65
instead. See Rollo, p. 9
[12] In a Resolution dated 4 December 2000. Rollo, p.
282.
[13] Id. at 205.
[14] See Section 7(c), Rule 141.
[15] See Section 7(d), id.
[16] Gochan v. Gochan, 423 Phil. 491, 502 (2001).
[17] Philippine Aluminum Wheels v. Fasgi Enterprises,
Inc., G.R. No. 137378, 12 October 2000, 342
SCRA 722, 734; citing Jovito R Salonga, Rex
Bookstore, Manila, Philippines, 1995 Edition,
p. 543.
[18] 159 U.S. 113 (1895)
[19] 47 Phil. 189 (1925). While the Philippine Supreme
Court in this case refused to enforce the
judgment of the Hongkong Court on the
ground of mistake of law or fact, it was
reversed on appeal to the US Supreme Court.
[20] Id. JJ. Malcolm and Avancea, dissenting.
[21] See also Borthwick v. Hon. Castro-Bartolome, G.R.
No. L-57338, 23 July 1987, 152 SCRA 129,
235; Philippine International Shipping
Corp. v. Court of Appeals, G.R. No. 77085, 26
April 1989, 172 SCRA 810, 819.
[22] Ultimately, matters of remedy and procedure such
as those relating to the service of summons or
court process upon the defendant, the
authority of counsel to appear and represent a
defendant and the formal requirements in a
decision are governed by the lex fori or the
internal law of the forum. Asiavest Merchant
Bankers (M) Berhad v. Court of Appeals, 414
Phil. 13, 29 (1991).
[23] Fraud, to hinder the enforcement within this
jurisdiction of a foreign judgment, must be
extrinsic, i.e., fraud based on facts not
controverted or resolved in the case where
judgment is rendered, or that which would go
to the jurisdiction of the court or would
deprive the party against whom judgment is
rendered a chance to defend the action to
which he has a meritorious case or defense. In
fine, intrinsic fraud, that is, fraud which goes
to the very existence of the cause of action
such as fraud in obtaining the consent to a
contract is deemed already adjudged, and it,
therefore, cannot militate against the
recognition or enforcement of the foreign
judgment. Philippine Aluminum
256
 Wheels v.Fasgi Enterprises, Inc., supra note
17.
[24] See, e.g., Nagarmull v. Binalbagan-Isabela Sugar Co.,
144 Phil. 72, 77 (1970); Ingenholl v.Walter E.
Olsen and Company, Inc., supra note 20.
[25] Roeher v. Rodriguez, G.R. No. 142820, 20 June
2003, 404 SCRA 495, 503.
[26] An action must be brought in the second state upon
the judgment recovered in the first. J. Salonga,
Private International Law (3rd ed., 1967), at
500; citing Goodrich, 600, 601; Chesire, 628; II
Beale, 1377. But see E. Scoles and P. Hay,
Conflict of Laws (2nd ed., 1982), at 969, which
recognizes that civil law countries provide a
procedure to give executory force to the
foreign judgment, as distinguished from the
Anglo-American common law (but not
statutory) practice of requiring an action on
the judgment.
[27] See Philsec Investment Corp. v. Court of Appeals,
G.R. No. 103493, 19 June 1997, 274 SCRA 102,
110.
[28] Northwest Orient Airlines v. Court of Appeals, G.R.
No. 112573, 9 February 1995, 241 SCRA 192,
199.
[29] See Section 3(a), Rule 1, Rules of Civil Procedure.
[30] Every ordinary civil action must be based on a
cause of action. Section 1, Rule 2, Rules of Civil
Procedure. A cause of action is the act or
omission by which a party violates a right of
another. Section 2, Rule 2, Rules of Civil
Procedure.
[31] See Pacific Asia Overseas Shipping Corp. v. NLRC,
G.R. No. 76595. 6 May 1988, 161 SCRA 122,
133.
[32] Soles & Hay, supra note 27, at 916.
[33] Ibid.
[34] Salonga, supra note 27, at 514; citing Cheshire, 803.
[35] Rollo, p. 30. Emphasis omitted.
[36] 133 Phil. 526 (1968).
[37] Id. at 528.
[38] Rollo, at 326, citing Arroz v. Alojado, 19 SCRA 711
(1967).
[39] Ibid citing Bunayog v. Tunas, 106 Phil. 715 (1959)
[40] Id. citing Baito v. Sarmiento, 109 Phil. 148 (1960).
[41] Id. citing De Rivera v. Halili, 9 SCRA 59 (1963).
[42] Id. citing Bautista v. Lim, 88 SCRA 479 (1979)
and De Leon v. Court of Appeals, 287 SCRA 94
(1998).
[43] Id. citing Amorganda v. Court of Appeals, 166 SCRA
203 (1988); Ortigas & Company v.Herrera,
120 SCRA 89 (1983).
[44] Id. citing Mercado v. Ubay, 187 SCRA 719 (1990)
and Filipino Pipe Workers Union v.Batario, Jr.,
163 SCRA 789 (1988).
[45] As amended by Rep. Act No. 7691.
[46] Supra note 32.
[47] Supra note 17.
[48] Supra note 18.
[49] H. Steiner & D. Vagts, Transnational Legal
Problems: Materials and Text (2nd ed., 1976),
at 775.
[50] Ibid.
[51] See Salonga, supra note 27, at 66.
[52] Id. at 502-503.
[53] Scoles & Hays, supra note 27, at 970.
[54] Steiner & Vagts, supra note 51, at 808. A decision
rendered in one of the Contracting States shall
be entitled to recognition and enforcement in
another Contracting State under the terms of
this Convention (1) if the decision was given
by a court considered to have jurisdiction
within the meaning of this Convention, and
(2) if it is no longer subject to ordinary forms
of review in the State of origin. Convention on
the Recognition and Enforcement of Foreign
Judgments in Civil and Commercial Matters,
Chapter II, Article 4.
[55] To date, only Cyprus, the Netherlands, Portugal and
Kuwait have either ratified or acceded to the
Convention.
[56] Steiner & Vagts, supra note 51.
[57] Steiner & Vagts, supra note 51,at 776.
[58] Salonga, supra note 51, at 502.
[59] Steiner & Vagts, supra note 27, at 779. A policy
common to all legal systems is to provide for
the final resolution of disputes. The policy is
furthered by each nations adoption of a view
of jurisdiction in the international sense
which recognizes the foreign courts assertion
of jurisdiction as satisfying its own notions of
due process in circumstances in which it itself
would have asserted jurisdiction. Soles &
Hay, supra note 27, at 976; citing Hay,
International versus Interstate Conflicts Law
in the United States, 35 Rabels Zeitschrift
429,450 n. 101 (1971) and
Cherun v. Frishman, 236 F. Supp. 292 (D.D.C.
1964). Salonga, in affirming the rule of want
of jurisdiction, cites the commentaries of
Cheshire, Wolff, Goodrich and Nussbaum.
[60] See, e.g., Salonga, supra note 27 at 513.
[61] Ibid; citing Henderson v. Henderson, 6 Q.B. (1844)
288; Vanquelin v. Bouard, 15 C.B. (N.S. 1863)
341; Godard v. Gray, L.R. 6 Q.B. 139 (1870);
Vadala v. Lawes 25 Q.B.D. (1890) 319, 316; cf.
Chandler v. Peketz, 297 U.S. 609, 56 S.Ct., 80
L.Ed. 881 (1936); Cheshire, 661-664; Wolff,
268; Goodrich, 603.
[62] Soles & Hay, supra note 27, at 978.
[63] Thus, when the foreign law, judgment or contract is
contrary to a sound and established public
policy of the forum, the said foreign law,
judgment or order shall not be applied. Bank
of America v. American Realty Corp., 378 Phil.
1279, 1296 (1999); citing Philippine Conflict of
257
 Laws, Eight Edition, 1996, Paras, page 46. Las
sentencias de tribunals extranjeros no pueden
ponerse en vigor en Filipinas si son contrarias a
las leyes, costumbres y orden pblico. Si dichas
decisiones, por la simple teora de reciprocidad,
cortesa judicial y urbanidad internacional son
base suficiente para que nuestros tribunales
decidan a tenor de las mismas, entonces
nuestros juzgados estaran en la pobre tessitura
de tener que dictar sentencias contrarias a
nuestras leyes, costumbres y orden pblico. Esto
es absurdo. Querubin v. Querubin, 87 Phil. 124,
133. (1950).
[64] See Section 48, Rule 39, Rules of Civil Procedure.
[65] Soles & Hays, supra note 27, at 979.
[66] [It] is generally recognized that, subject to
[exceptions], a rule of general customary
international law is binding on all States,
whether or not they have participated in the
practice from which it sprang. H. Thirlway,
The Sources of International Law,
International Law (ed. by M.Evans, 1st ed.,
2003), at 124.
[67] Not only must the acts concerned amount to a
settled practice, but they must also be such, or
be carried out in such a way, as to be evidence
of a belief that this practice is rendered
obligatory by the existence of a rule of law
requiring it. The need for such a belief, i.e., the
existence of a subjective element, is implicit in
the very notion of the opinion juris sive
necessitatis. North Sea Continental Shelf,
Judgment, ICJ Reports 1969, p. 3, para. 77;
cited in H. Thirlway, ibid.
[68] The problems that arise in the enforcement of
foreign judgments are generally to be solved
by the principles of international law. The
Philippines by its Constitution, adopts the
generally accepted principles of international
law. F. Gupit, Enforcement of Foreign
Judgments and Arbitral Awards, XXIII J. Integ.
Bar. Phil. 3, at 69.
[69] Divergent practices do not necessarily preclude
recognition of a customary norm. In reviewing
the question of the existence of customary
rules forbidding the use of force or
intervention, the International Court of Justice
pertinently held: It is not to be expected that
in the practice of States the application of the
rules in question should have been perfect, in
the sense that States should have refrained,
with complete consistency, from the use of
force or from intervention in each others
internal affairs. The Court does not consider
that, for a rule to be established as
customary, the corresponding practice
must be in absolutely rigorous conformity
with the rule. In order to deduce the
existence of customary rules, the Court deems
it sufficient that the conduct of States, should,
in general, be consistent with such rules, and
that instances of State conduct inconsistent
with a given rule should generally have been
treated as breaches of that rule, not as
indications of recognition of a new rule.
(emphasis supplied) Military and Paramilitary
Activities in and against Nicaragua
(Nicaragua v. United States of America),
Merits, Judgment, ICJ Reports 1986, p. 14,
para. 186; citing in H. Thirlway, supra note 66.
[70] And other inferior courts, relative to their
jurisdictions.
[71] Sec. 2, Art. II, 1987 Const., which states The
Philippines renounces war as an instrument
of national policy, adopts the generally
accepted principles of international law as
part of the law of the land and adheres to the
policy of peace, equality, justice, freedom,
cooperation and amity with all nations.
[72] Indeed, the valuation of foreign money judgments
remains a matter of debate in international
law. In the United States, Section 144 of the
Restatement, Second, Conflicts of Laws (1971)
adopts the rule that the forum would convert
the currency into local currency as of the date
of the award. However, this rule has been
criticized. In England, the judgment debtor
may now effect payment either in the foreign
currency in the amount due or in local
currency equivalent to the foreign currency
on the date of payment. French and German
law similarly permit the expression of a
judgment in foreign currency. Soles &
Hays, supra note 27, at 973.
[73] Ty v. Trampe, 321 Phil. 81 (1995).
[74] Tarrosa v. Singson, G.R. No. 111243, 25 May 1994,
232 SCRA 553, 557.
G.R. No. 167052, March 11, 2015
BANK OF THE PHILIPPINE ISLANDS SECURITIES
CORPORATION, Petitioner, v. EDGARDO V.
GUEVARA, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review under Rule 45
of the Rules of Court seeking the reversal and setting
aside of the Decision1 dated December 19, 2003 and
Resolution2 dated February 9, 2005 of the Court
Appeals in CA-G.R. CV No. 69348, affirming the
Decision3 dated September 11, 2000 of the Regional
Trial Court (RTC) of Makati City, Branch 57 in Civil
Case No. 92-1445. The RTC acted favorably on the
action instituted by respondent Edgardo V. Guevara
for the enforcement of a foreign judgment,
particularly, the Order4 dated March 13, 1990 of the
United States (U.S.) District Court for the Southern
District of Texas, Houston Division (U.S. District
Court), in Civil Action No. H-86-440, and ordered
petitioner Bank of the Philippine Islands (BPI)
Securities Corporation to pay respondent (a) the sum
of US$49,500.00 with legal interest; (b) P250,000.00
attorney’s fees and litigation expenses; and (c) costs of
suit.
The facts are culled from the records of the case.
258
Ayala Corporation, a holding company, and its
subsidiaries are engaged in a wide array of businesses
including real estate, financial services,
telecommunications, water and used water,
electronics manufacturing services, automotive
dealership and distributorship, business process
outsourcing, power, renewable energy, and transport
infrastructure.5
In the 1980s, Ayala Corporation was the majority
stockholder of Ayala Investment and Development
Corporation (AIDC). AIDC, in turn, wholly owned
Philsec Investment Corporation (PHILSEC), a domestic
stock brokerage firm, which was subsequently bought
by petitioner; and Ayala International Finance Limited
(AIFL), a Hong Kong deposit-taking corporation, which
eventually became BPI International Finance Limited
(BPI-IFL). PHILSEC was a member of the Makati Stock
Exchange and the rules of the said organization
required that a stockbroker maintain an amount of
security equal to at least 50% of a client’s outstanding
debt.
Respondent was hired by Ayala Corporation in
1958. Respondent later became the Head of the Legal
Department of Ayala Corporation and then the
President of PHILSEC from September 1, 1980 to
December 31, 1983. Thereafter, respondent served as
Vice-President of Ayala Corporation until his
retirement on August 31, 1997.
While PHILSEC President, one of respondent’s
obligations was to resolve the outstanding loans of
Ventura O. Ducat (Ducat), which the latter obtained
separately from PHILSEC and AIFL. Although Ducat
constituted a pledge of his stock portfolio valued at
approximately US$1.4 million, Ducat’s loans already
amounted to US$3.1 million. Because the security for
Ducat’s debts fell below the 50% requirement of the
Makati Stock Exchange, the trading privileges of
PHILSEC was in peril of being suspended.
Ducat proposed to settle his debts by an exchange of
assets. Ducat owned several pieces of real estate in
Houston, Texas, in partnership with Drago Daic (Daic),
President of 1488, Inc., a U.S.-based
corporation. Respondent relayed Ducat’s proposal to
Enrique Zobel (Zobel), the Chief Executive Officer of
Ayala Corporation. Zobel was amenable to Ducat’s
proposal but advised respondent to send Thomas
Gomez (Gomez), an AIFL employee who traveled often
to the U.S., to evaluate Ducat’s properties.
In December of 1982, Gomez examined several parcels
of real estate that were being offered by Ducat and
1488, Inc. for the exchange. Gomez, in a telex to
respondent, recommended the acceptance of a parcel
of land in Harris County, Texas (Harris County
property), which was believed to be worth around
US$2.9 million. Gomez further opined that the “swap
would be fair and reasonable” and that it would be
better to take this opportunity rather than pursue a
prolonged legal battle with Ducat. Gomez’s
recommendation was brought to Zobel’s
attention. The property-for-debt exchange was
subsequently approved by the AIFL Board of Directors
even without a prior appraisal of the Harris County
property. However, before the exchange actually
closed, an AIFL director asked respondent to obtain
such an appraisal.
William Craig (Craig), a former owner of the Harris
County property, conducted the appraisal of the
market value of the said property. In his January 1983
appraisal, Craig estimated the fair market value of the
Harris County property at US$3,365,000.
Negotiations finally culminated in an
Agreement,6 executed on January 27, 1983 in Makati
City, Philippines, among 1488, Inc., represented by
Daic; Ducat, represented by Precioso Perlas (Perlas);
AIFL, represented by Joselito Gallardo (Gallardo); and
PHILSEC and Athona Holdings, N. V. (ATHONA), both
represented by respondent. Under the Agreement, the
total amount of Ducat’s debts was reduced from
US$3.1 million to US$2.5 million; ATHONA, a company
wholly owned by PHILSEC and AIFL, would buy the
Harris County property from 1488, Inc. for the price of
US$2,807,209.02; PHILSEC and AIFL would grant
ATHONA a loan of US$2.5 million, which ATHONA
would entirely use as initial payment for the purchase
price of the Harris County property; ATHONA would
execute a promissory note in favor of 1488, Inc. in the
sum of US$307,209.02 to cover the balance of the
purchase price for the Harris County property; upon
its receipt of the initial payment of US$2.5 million from
ATHONA, 1488, Inc. would then fully pay Ducat’s debts
to PHILSEC and AIFL in the same amount; for their
part, PHILSEC and AIFL would release and transfer
possession of Ducat’s pledged stock portfolio to 1488,
Inc.; and 1488, Inc. would become the new creditor of
Ducat, subject to such other terms as they might agree
upon.
The series of transactions per the Agreement was
eventually executed. However, after acquiring the
Harris County property, ATHONA had difficulty selling
the same. Despite repeated demands by 1488, Inc.,
ATHONA failed to pay its promissory note for the
balance of the purchase price for the Harris County
property, and PHILSEC and AIFL refused to release the
remainder of Ducat’s stock portfolio, claiming that
they were defrauded into believing that the said
property had a fair market value higher than it
actually had.
Civil Action No. H-86-440 before the
U.S. District Court of Southern District
of Texas, Houston Division
On October 17, 1985, 1488, Inc. instituted a suit
against PHILSEC, AIFL, and ATHONA for (a)
misrepresenting that an active market existed for two
shares of stock included in Ducat’s portfolio when, in
fact, said shares were to be withdrawn from the
trading list; (b) conversion of the stock portfolio; (c)
fraud, as ATHONA had never intended to abide by the
provisions of its promissory note when they signed it;
and (d) acting in concert as a common enterprise or in
the alternative, that ATHONA was the alter ego of
PHILSEC and AIFL. The suit was docketed as Civil
Action No. H-86-440 before the U.S. District Court.
PHILSEC, AIFL, and ATHONA filed counterclaims
against 1488, Inc., Daic, Craig, Ducat, and respondent,
for the recovery of damages and excess payment or, in
the alternative, the rescission of the sale of the Harris
County property, alleging fraud, negligence, and
conspiracy on the part of counter-defendants who
knew or should have known that the value of said
259
property was less than the appraisal value assigned to
it by Craig.
Before the referral of the case to the jury for verdict,
the U.S. District Court dropped respondent as counter-
defendant for lack of evidence to support the
allegations against him. Respondent then moved in
open court to sanction petitioner (formerly PHILSEC),
AIFL, and ATHONA based on Rule 11 of the U.S.
Federal Rules of Civil Procedure.7
In its Order dated March 13, 1990, the U.S. District
Court stated that on February 14, 1990, after trial, the
jury returned a verdict for 1488, Inc. In the same
Order, the U.S. District Court ruled favorably on
respondent’s pending motion for sanction, thus:
During the course of the trial, the Court was required
to review plaintiff’s Exhibit No. 91 to determine
whether the exhibit should be admitted. After
reviewing the exhibit and hearing the evidence, the
Court concluded that the defendants’ counterclaims
against Edgardo V. Guevara are frivolous and brought
against him simply to humiliate and embarrass him. It
is the opinion of the Court that the defendants, Philsec
Investment Corporation, A/K/A BPI Securities, Inc.,
and Ayala International Finance Limited, should be
sanctioned appropriately based on Fed. R. Civ. P. 11
and the Court’s inherent powers to punish
unconscionable conduct. Based upon the motion and
affidavit of Edgardo V. Guevara, the Court finds that
$49,450 is reasonable punishment.
ORDERED that defendants, Philsec Investment
Corporation A/K/A BPI Securities, Inc., and Ayala
International Finance Limited, jointly and severally,
shall pay to Edgardo V. Guevara $49,450 within 30
days of the entry of this order.8
Petitioner, AIFL, and ATHONA appealed the jury
verdict, as well as the aforementioned order of the U.S.
District Court for them to pay respondent
US$49,450.00; while 1488, Inc. appealed a post-
judgment decision of the U.S. District Court to amend
the amount of attorney’s fees awarded. The appeals
were docketed as Case No. 90-2370 before the U.S.
Court of Appeals, Fifth Circuit.
The U.S. Court of Appeals rendered its Decision on
September 3, 1991 affirming the verdict in favor of
1488, Inc. The U.S. Court of Appeals found no basis for
the allegations of fraud made by petitioner, AIFL, and
ATHONA against 1488, Inc., Daic, Craig, and Ducat:
[2] To state a cause of action for fraud under Texas
law, a plaintiff must allege sufficient facts to show:
(1) that a material representation was made;
(2) that it was false;
(3) that when the speaker made it he knew that it
was false or made it recklessly without any
knowledge of the truth and as a positive
assertion;
(4) that he made it with the intention that it should
be acted on by the party;
(5) that the party acted in reliance upon it;
(6) that he thereby suffered injury.
Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185
(Tex.1977). We agree with the district court’s decision
to grant a directed verdict against the defendants. The
defendants failed to allege sufficient facts to establish
the elements necessary to demonstrate fraud. In
particular, the defendants have failed to allege any
facts that would tend to show that the plaintiff or any
of the third party defendants made a false
representation or a representation with reckless
disregard as to its truth.
The Houston real estate market was extremely volatile
during the late 1970’s and the early 1980’s. Like a
stream of hot air, property values rose rapidly as the
heat and fury generated by speculation and
construction plans mounted, but, just as rapidly, the
climate cooled and the high-flying market came
crashing to an all time low. The real estate transaction
involved in this case was certainly affected by this
environment of capriciousness. Moreover, a number
of additional variables may have contributed to the
uncertainty of its value. For instance, the land abutted
a two-lane asphalt road that had been targeted by the
state for conversion into a major multi-lane divided
highway. Water and sewage treatment facilities were
located near the boundary lines of the property. In
addition, Houston’s lack of conventional zoning
ordinances meant that the value of the property could
fluctuate depending upon the use (commercial or
residential) for which the property would ultimately
be used.
[3] The fact that the defendants were unable to sell the
property at the price for which it had been appraised
does not demonstrate that the plaintiff or the third
party defendants knew that the value of the property
was less than the appraised value, nor does it establish
that the opposing parties were guilty of negligent
misrepresentation or negligence.
[4] In support of their allegation of fraud, the
defendants rely heavily on a loan application
completed by 1488 shortly before the subject property
was transferred to Athona. See Defendant’s Exhibit
29. At the time, 1488 still owed approximately
$300,000 to Republic of Texas Savings Association on
its original loan for the subject property. The debt had
matured and 1488 was planning to move the loan to
Home Savings Association of Houston, that is, take out
a loan from Home Savings to pay off the debt to
Republic. 1488 had planned to borrow $350,000 for
that purpose. A line item on the Home Savings loan
application form asked for the amount of the loan as a
percentage of the appraised value of the land. A figure
of thirty-nine percent was typed into that space, and
the defendants suggest that this proves that the
plaintiff knew Craig’s appraisal was erroneous. The
defendants reason that if the $350,000 loan amount
was only thirty-nine percent of the land’s appraised
value, then the real estate must have been worth
approximately $897,436.
Although their analysis is sound, the conclusion
reached by the defendants cannot withstand
additional scrutiny. At the time that the loan
application was completed, 1488 did not request to
have a new appraisal done for the property. Instead,
1488 planned to use the numbers that had been
generated for a quasi-appraisal done in 1977. The
1977 report purported only to “supplement” an earlier
appraisal that had been conducted in 1974, and the
supplement described its function as estimating
260
market value “for mortgage loan purposes” only. See
Defendant’s Trial Exhibit 4. The two page supplement
was based on such old information that even the Home
Savings Association would not accept it without
additional collateral as security for the loan. See
Record on Appeal, Vol. 17 at 5-29 to 5-30. The loan,
however, was never made because the property was
transferred to Athona, and the outstanding loan to
Republic was paid off as part of that transaction. In
addition, the loan application itself was never signed
by anyone affiliated with 1488. The district court was
correct in dismissing this argument in support of the
defendant’s fraud allegations.
[5] The defendants also allege that the plaintiff and
counter defendants knew that Craig’s appraisal was
fraudulent because the purchaser’s statement signed
by their own representative, and the seller’s
statement, signed by the plaintiff, as well as the title
insurance policy all recited a purchase price of
$643,416.12. Robert Higgs, general counsel for 1488,
explained that because of the nature of the
transaction, 1488, for tax purposes, wanted the
purchase price on the closing statement to reflect only
that amount of cash actually exchanged at the closing
as well as the promissory note given at the closing. See
Record on Appeal, Vol. 17 at 5-127. Although the
closing documents recite a purchase price well under
the actual sales price, nothing indicates that any of the
parties actually believed the property to be worth less
than the sales amount.
The defendants also assert that it was error for the
district court to deny them permission to designate O.
Frank McPherson, a Houston appraiser, as an expert
witness after the cutoff date established by a pretrial
order for such designations. The defendants contend
that the error prevented them from presenting facts
that would support their fraud allegations. Although
the defendants were allowed to present the testimony
of another expert witness on the subject of valuation,
they argue that McPherson’s testimony was critical
because he had performed an appraisal of the
property for the Texas Highway Department close to
the time period during which Craig had made his
appraisal. McPherson’s appraisal was performed as
part of the State’s condemnation proceedings that
preceded the planned highway expansion next to the
subject property.
x x x x
[9] In their briefs, the defendants fail to provide an
adequate explanation for their failure to identify their
expert witness in accordance with the district court’s
pretrial order. This law suit was initiated in 1985, and
the defendants had until November of 1988 to
designate their expert witnesses. The defendants
were aware of the condemnation proceedings, and
they, therefore, had approximately three years to
determine the identity of any appraiser used by the
state. The defendants simply failed to make this
inquiry.
Enforcement of the district court’s pretrial order did
not leave the defendants without an expert witness on
the issue of valuation, and the available expert had
also conducted appraisals for the Texas Highway
Department in the area surrounding the subject
property. x x x had also sustained actual damages. The U.S. Court of
Although the degree of prejudice suffered by the
plaintiff due to the late designation of an expert would
not have been great, a district court still has the
discretion to control pretrial discovery and sanction a
party’s failure to follow a scheduling order. See id. at
791. Such action is particularly appropriate here,
where the defendants have failed to provide an
adequate explanation for their failure to identify their
expert within the designated timetable.
x x x x
The defendants failed to produce enough evidence
from which fraud could be inferred to justify the
submission of the issue to a jury. Conclusional
allegations or speculation regarding what the plaintiff
knew or did not know concerning the value of the
subject property are insufficient to withstand a motion
for a directed verdict. The district court committed no
error in granting the motion.
x x x x
Since the defendants failed to present the district
court with any facts that would tend to show that the
plaintiffs committed a fraud against them, their claim
of a conspiracy to commit fraud must also fail.9
The U.S. Court of Appeals likewise adjudged that
petitioner, AIFL, and ATHONA failed to prove
negligence on the part of 1488, Inc., Daic, Craig, and
Ducat in the appraisal of the market value of the said
property:
[10, 11] The defendants have likewise failed to
present any facts that would tend to support their
claim of negligent misrepresentation or
negligence. The defendants rely on assumptions and
unsupportable conclusions of law in establishing their
case for negligence: “Assuming the Property’s true
value is less than $800,000, it is reasonable
to assume that the counter defendants failed to
exercise reasonable care or competence . . .” Brief for
Athona at 45-46 x x x. A party may not rely on
assumptions of fact to carry their case forward. The
defendants have presented no facts to suggest that the
plaintiff was negligent in acquiring its appraisal. The
plaintiff hired Craig, a real estate broker, to perform
the appraisal after the defendants had already given
their initial approval for the transaction. Craig had
performed real estate appraisals in the past, and Texas
law permits real estate brokers to conduct such
appraisals, see Tex.Rev.Civ.Stat.Ann. art. 6573a,
§2(2)(E) (Vernon Supp. 1988) (Original version at
Tex.Rev.Civ.Stat.Ann. art. 6573a, §4(1)(e) (Vernon
1969). These facts do not support a claim of
negligence.
For the foregoing reasons the district court committed
no error in granting a directed verdict against the
counterclaims advanced by the defendants.10
The U.S. Court of Appeals, however, vacated the award
of exemplary damages in favor of 1488, Inc. for the
fraudulent misrepresentation regarding the
marketability of the two shares of stock in Ducat’s
portfolio. Under Texas law, a jury may not award
damages unless it was determined that the plaintiff
261
Appeals agreed with petitioner, AIFL, and ATHONA
that 1488, Inc. brought its suit alleging fraudulent
misrepresentation after the two-year statute of
limitation had expired. The misrepresentation issue
should never have gone to the jury. Therefore, the
jury’s finding of actual damages is nullified; and since
the jury verdict is left without a specific finding of
actual damages, the award of exemplary damages
must be vacated.
The U.S. Court of Appeals also vacated the award of
Rule 11 sanctions in favor of respondent and against
petitioner, AIFL, and ATHONA for being rendered
without due process, and remanded the issue to the
U.S. District Court:
[18-20] The Rule 11 motion was first made by Guevara
on February 14, 1990, and the court immediately
ruled on the issue without giving the defendants an
opportunity to prepare a written response. See
Record on Appeal, Vol. 22 at 10-25 to 10-37. Although,
the defendants were given an opportunity to speak,
we conclude that the hearing failed to comport with
the requirements of due process, which demand that
the defendants be provided with adequate notice and
an opportunity to prepare a response. See Henderson
v. Department of Public Safety and Corrections, 901
F.2d 1288, 1293-94 (5th Cir.1990). Providing specific
notice and an opportunity to respond is particularly
important in cases, such as the one before us, in which
the sanctions have been imposed on the clients and
not the attorneys. See Donaldson v. Clark, 819 F.2d
1551, 1560 (11th Cir.1987) (“If sanctions are
proposed to be imposed on the client, due process will
demand more specific notice because the client is
likely unaware of the existence of Rule 11 and should
be given the opportunity to prepare a defense.”). A
separate hearing is not a prerequisite to the
imposition of Rule 11 sanctions, see Donaldson, 819
F.2d at 1560 n. 12, but the defendants in this case,
should have been given more of an opportunity to
respond to the motion than that provided at the
hearing in which the motion was first
raised. Providing the defendant with an opportunity
to mount a defense “on the spot” does not comport
with due process. Given that the defendants were not
provided with adequate notice or an opportunity to be
heard, we vacate the award of sanctions and remand
so that the district court can provide the defendants
with an adequate opportunity to be heard.11
Finally, the U.S. Court of Appeals similarly vacated the
award of attorney’s fees and remanded the matter to
the U.S. District Court for recalculation to conform
with the requirements provided in the promissory
note.
In accordance with the Decision dated September 3,
1991 of the U.S. Court of Appeals, the U.S. District
Court issued an Order12 dated October 28, 1991 giving
petitioner, AIFL, and ATHONA 20 days to formally
respond to respondent’s motion for Rule 11
sanctions. Petitioner, AIFL, and ATHONA jointly filed
before the U.S. District Court their opposition to
respondent’s motion for Rule 11
sanctions.13 Respondent filed his reply to the
opposition, to which petitioner, AIFL, and ATHONA, in
turn, filed a reply-brief.14
In an Order15 dated December 31, 1991, the U.S.
District Court still found respondent’s motion for Rule
11 sanctions meritorious and reinstated its Order
dated March 13, 1990:
The basis of the Court’s prior decision as well as now
is the fact that the defendants filed suit against
Guevara with knowledge that the basis of the suit was
unfounded. In the defendants’ file was an appraisal
from an international appraisal firm, which the
defendants refused to disclose during discovery and
was only discovered at a bench conference during a
discussion about appraisers. Based on the defendants’
own appraisers, no basis existed for a suit by the
defendants against their employee.
The previous judgment entered by this Court is
REINSTATED.
The above-quoted Order of the U.S. District Court
attained finality as it was no longer appealed by
petitioner, AIFL, and ATHONA.
Through a letter dated February 18, 1992, respondent
demanded that petitioner pay the amount of
US$49,450.00 awarded by the U.S. District Court in its
Order dated March 13, 1990. Given the continuous
failure and/or refusal of petitioner to comply with the
said Order of the U.S. District Court, respondent
instituted an action for the enforcement of the same,
which was docketed as Civil Case No. 92-1445 and
raffled to the RTC of Makati City, Branch 57.
Civil Case No. 92-1445 before
Branch 57 of the RTC of Makati City
In his Complaint for the enforcement of the Order
dated March 13, 1990 of the U.S. District Court in Civil
Action No. H-86-440, respondent prayed that
petitioner be ordered to pay:
1. The sum of US$49,450.00 or its equivalent in
Philippine Pesos x x x with interest from date
of demand;
2. Attorney’s fees and litigation expenses in the
sum of P250,000.00;
3. Exemplary damages of P200,000.00; and
4. Costs of the suit.16
In its Amended Answer Ad Cautelam,17 petitioner
opposed the enforcement of the Order dated March
13, 1990 of the U.S. District Court on the grounds that
it was rendered upon a clear mistake of law or fact
and/or in violation of its right to due process.
In the course of the pre-trial and scheduled trial
proceedings, the parties respectively manifested
before the court that they were dispensing with the
presentation of their witnesses since the subject
matter of their testimonies had already been
stipulated upon.18
Thereafter, the parties formally offered their
respective evidence which entirely consisted of
documentary exhibits. Respondent submitted
authenticated and certified true copies of Rule 11 of
the U.S. Federal Rules of Civil Procedure;19 the Orders
262
dated March 13, 1990, October 28, 1991, and
December 31, 1991 of the U.S. District Court in Civil
Action No. H-86-440;20 the Decision dated September
3, 1991 of the U.S. Court of Appeals in Case No. 90-
2370;21 and the opposition to respondent’s motion for
Rule 11 sanctions and reply-brief filed by PHILSEC,
AIFL, and ATHONA before the U.S. District
Court.22 Petitioner presented photocopies of
pleadings, documents, and transcripts of stenographic
notes in Civil Action No. H-86-440 before the U.S.
District Court;23 the pleadings filed in other cases
related to Civil Case No. 92-1440;24 and a summary of
lawyer’s fees incurred by petitioner in the U.S.25 The
RTC admitted in evidence the documentary exhibits of
the parties in its Orders dated September 21, 1998 and
February 8, 1999,26 and then deemed the case
submitted for decision.
The RTC rendered a Decision on September 11, 2000
with the following dispositive portion:
WHEREFORE, judgment is hereby rendered in favor of
[respondent] Edgardo V. Guevara ordering [petitioner]
BPI Securities Corporation to pay [respondent] the
following:
1. the sum of US$49,500.00 with legal interest
from the filing of this case until fully paid;
2. the sum of P250,000.00 as attorney’s fees and
litigation expenses; and
3. the costs of suit.
An award of exemplary damages for P200,000.00 is
denied for being speculative.27
Petitioner appealed to the Court of Appeals, assigning
the following errors on the part of the RTC:
A. The trial court erred in not passing upon the
merit or validity of [petitioner’s] defenses
against the enforcement of the foreign
judgment in the Philippines.
Had the trial court considered [petitioner’s]
defenses, it would have concluded that the
foreign judgment was not enforceable
because it was made upon a clear mistake of
law or fact and/or was made in violation of
the [petitioner’s] right to due process.
B. The trial court erred in not utilizing the
standard for determining the enforceability of
the foreign award that was agreed upon by
the parties to this case during the pre-trial,
namely, did the defendants in the Houston
case (PHILSEC, AIFL, AND ATHONA) have
reasonable grounds to implead [respondent]
in the Houston case based upon the body of
the evidence submitted therein. Thus,
whether or not PHILSEC, AIFL and ATHONA
ultimately prevailed against [respondent] was
immaterial or irrelevant; the question only
was whether they had reasonable grounds to
proceed against him, for if they had, then
there was admittedly no basis for the Rule 11
award against them by the Houston Court.
xxxx
C. In the light of its ruling, the trial court failed to
pass upon and resolve the other issues and/or
defenses expressly raised by [petitioner],
including the defense that PHILSEC, AIFL, and
ATHONA were deprived of their right to
defend themselves against the Rule 11
sanction and the main decision because of the
prohibitive cost of legal representation in the
us and also because of the gross negligence of
its US counsel. x x x.28
In its Decision dated December 19, 2003, the Fifth
Division of the Court of Appeals decreed:
WHEREFORE, the Decision dated 11 September 2000
in Civil Case No. 92-1445 of the Regional Trial Court of
Makati, Branch 57, is hereby AFFIRMED in all respect
with costs against [petitioner].29
In its Motion for Reconsideration,30 petitioner
lamented that the Fifth Division of the Court of
Appeals failed to resolve on its own petitioner’s appeal
as the Decision dated December 19, 2003 of the said
Division was copied almost verbatim from
respondent’s brief. Thus, petitioner prayed that the
Fifth Division of the Court of Appeals recuse itself from
deciding petitioner’s Motion for Reconsideration and
that the case be re-raffled to another division.
The Fifth Division of the Court of Appeals maintained
in its Resolution dated May 25, 2004 that the issues
and contentions of the parties were all duly passed
upon and that the case was decided according to its
merits. The said Division, nonetheless, abstained from
resolving petitioner’s Motion for Reconsideration and
directed the re-raffle of the case.31
Petitioner’s Motion for Reconsideration was re-raffled
to and subsequently resolved by the Tenth Division of
the Court of Appeals. In its Resolution dated February
9, 2005, the Tenth Division of the appellate court
denied the said Motion for lack of merit.32
Hence, petitioner seeks recourse from this Court via
the instant Petition for Review, insisting that the Court
of Appeals erred in affirming the RTC judgment which
enforced the Order dated March 13, 1990 of the U.S.
District Court in Civil Action No. H-86-440.
Petitioner contends that it was not accorded by the
Court of Appeals the right to refute the foreign
judgment pursuant to Rule 39, Section 48 of the Rules
of Court because the appellate court gave the effect
of res judicata to the said foreign judgment. The Court
of Appeals copied wholesale or verbatimthe
respondent’s brief without addressing the body of
evidence adduced by petitioner showing that it had
reasonable grounds to implead respondent in Civil
Action No. H-86-440.
Petitioner asserts that the U.S. District Court
committed a clear mistake of law and fact in its
issuance of the Order dated March 13, 1990, thus, said
Order is unenforceable in this jurisdiction. Petitioner
discusses in detail its evidence proving that
respondent, together with 1488, Inc., Ducat, Craig, and
263
Daic, induced petitioner to agree to a fraudulent
deal. Petitioner points out that respondent had the
duty of looking for an independent and competent
appraiser of the market value of the Harris County
property; that instead of choosing an unbiased and
skilled appraiser, respondent connived with 1488, Inc.,
Ducat, and Daic in selecting Craig, who turned out to
be the former owner of the Harris County property
and a close associate of 1488, Inc. and Daic; and that
respondent endorsed to petitioner Craig’s appraisal of
the market value of the Harris County property, which
was overvalued by more than 400%.
According to petitioner, it had reasonable grounds to
implead respondent in Civil Action No. H-86-440 so
the sanction imposed upon it under Rule 11 of the U.S.
Federal Rules of Civil Procedure was
unjustified. Petitioner additionally argues that there is
no basis for the U.S. District Court to impose upon it
the Rule 11 sanction as there is nothing in the said
provision which allows “the imposition of sanctions
for simply bringing a meritless lawsuit.” If the Rule 11
sanction was imposed upon petitioner as punishment
for impleading a party (when it had reasonable basis
for doing so) and not prevailing against said party,
then, petitioner claims that such a sanction is against
Philippine public policy and should not be enforced in
this jurisdiction. Settled in this jurisdiction that there
should be no premium attached to the right to litigate,
otherwise parties would be very hesitant to assert a
claim in court.
Petitioner further alleges that it was denied due
process in Civil Action No H-86-440 because: (1) the
U.S. District Court imposed the Rule 11 sanction on the
basis of a single document, i.e., the letter dated
September 26, 1983 of Bruce C. Bossom, a partner at
Jones Lang Wooton, a firm of chartered surveyors and
international real estate consultants, addressed to a
Mr. Senen L. Matoto of AIFL (marked as Exhibit 91
before the U.S. District Court), which was never
admitted into evidence; (2) in said letter, Jones Lang
Wooton was “soliciting a listing agreement” and in
which the “said firm unilaterally, without being asked
as to the value of the [Harris County] property,
indicated a value for the [same] which approximate[d]
with the value given in the Craig appraisal,” hence, it
cannot be used as basis to conclude that petitioner,
AIFL, and ATHONA assented to Craig’s appraisal of the
Harris County property; (3) the counsel who
represented petitioner, AIFL, and ATHONA in Civil
Action No. H-86-440 before the U.S. District Court was
grossly ignorant and/or negligent in the prosecution
of their counterclaims and/or in proving their
defenses, such as when said counsel failed to present
an expert witness who could have testified as to the
actual market value of the Harris County property or
when said counsel failed to discredit respondent’s
credibility despite the availability of evidence that
respondent had been previously fined by the
Philippine Securities and Exchange Commission for
“stock manipulation;” and (4) the excessive and
unconscionable legal fees charged by their U.S. counsel
effectively prevented them from making further
appeal.
The Court finds the Petition bereft of merit.
In Mijares v. Rañada,33 the Court extensively discussed
the underlying principles for the recognition and
enforcement of foreign judgments in Philippine
jurisdiction:
There is no obligatory rule derived from treaties or
conventions that requires the Philippines to recognize
foreign judgments, or allow a procedure for the
enforcement thereof. However, generally accepted
principles of international law, by virtue of the
incorporation clause of the Constitution, form part of
the laws of the land even if they do not derive from
treaty obligations. The classical formulation in
international law sees those customary rules accepted
as binding result from the combination two elements:
the established, widespread, and consistent practice
on the part of States; and a psychological element
known as the opinion juris sive necessitates (opinion as
to law or necessity). Implicit in the latter element is a
belief that the practice in question is rendered
obligatory by the existence of a rule of law requiring it.
While the definite conceptual parameters of the
recognition and enforcement of foreign judgments
have not been authoritatively established, the Court
can assert with certainty that such an undertaking is
among those generally accepted principles of
international law. As earlier demonstrated, there is a
widespread practice among states accepting in
principle the need for such recognition and
enforcement, albeit subject to limitations of varying
degrees. The fact that there is no binding universal
treaty governing the practice is not indicative of a
widespread rejection of the principle, but only a
disagreement as to the imposable specific rules
governing the procedure for recognition and
enforcement.
Aside from the widespread practice, it is indubitable
that the procedure for recognition and enforcement is
embodied in the rules of law, whether statutory or
jurisprudential, adopted in various foreign
jurisdictions. In the Philippines, this is evidenced
primarily by Section 48, Rule 39 of the Rules of Court
which has existed in its current form since the early
1900s. Certainly, the Philippine legal system has long
ago accepted into its jurisprudence and procedural
rules the viability of an action for enforcement of
foreign judgment, as well as the requisites for such
valid enforcement, as derived from internationally
accepted doctrines. Again, there may be distinctions
as to the rules adopted by each particular state, but
they all prescind from the premise that there is a rule
of law obliging states to allow for, however generally,
the recognition and enforcement of a foreign
judgment. The bare principle, to our mind, has
attained the status of opinio juris in international
practice.
This is a significant proposition, as it acknowledges
that the procedure and requisites outlined in Section
48, Rule 39 derive their efficacy not merely from the
procedural rule, but by virtue of the incorporation
clause of the Constitution. Rules of procedure are
promulgated by the Supreme Court, and could very
well be abrogated or revised by the high court
itself. Yet the Supreme Court is obliged, as are all State
components, to obey the laws of the land, including
generally accepted principles of international law
which form part thereof, such as those ensuring the
qualified recognition and enforcement of foreign
judgments. (Citations omitted.)
264

It is an established international legal principle that
final judgments of foreign courts of competent
jurisdiction are reciprocally respected and rendered
efficacious subject to certain conditions that vary in
different countries.34 In the Philippines, a judgment or
final order of a foreign tribunal cannot be enforced
simply by execution. Such judgment or order merely
creates a right of action, and its non-satisfaction is the
cause of action by which a suit can be brought upon
for its enforcement.35 An action for the enforcement of
a foreign judgment or final order in this jurisdiction is
governed by Rule 39, Section 48 of the Rules of Court,
which provides:
SEC. 48. Effect of foreign judgments or final orders. –
The effect of a judgment or final order of a tribunal of a
foreign country, having jurisdiction to render the
judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific
thing, the judgment or final order is conclusive upon
the title to the thing; and
(b) In case of a judgment or final order against a
person, the judgment or final order is presumptive
evidence of a right as between the parties and their
successors in interest by a subsequent title.
In either case, the judgment or final order may be
repelled by evidence of a want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of
law or fact.
The Court expounded in Mijares on the application of
the aforequoted provision:
There is an evident distinction between a foreign
judgment in an action in rem and one in personam. For
an action in rem, the foreign judgment is deemed
conclusive upon the title to the thing, while in an
action in personam, the foreign judgment is
presumptive, and not conclusive, of a right as between
the parties and their successors in interest by a
subsequent title. However, in both cases, the foreign
judgment is susceptible to impeachment in our local
courts on the grounds of want of jurisdiction or notice
to the party, collusion, fraud, or clear mistake of law or
fact. Thus, the party aggrieved by the foreign
judgment is entitled to defend against the enforcement
of such decision in the local forum. It is essential that
there should be an opportunity to challenge the
foreign judgment, in order for the court in this
jurisdiction to properly determine its efficacy.
It is clear then that it is usually necessary for an
action to be filed in order to enforce a foreign
judgment, even if such judgment has conclusive
effect as in the case of in rem actions, if only for the
purpose of allowing the losing party an
opportunity to challenge the foreign judgment,
and in order for the court to properly determine
its efficacy. Consequently, the party attacking a
foreign judgment has the burden of overcoming
the presumption of its validity.
The rules are silent as to what initiatory procedure
must be undertaken in order to enforce a foreign
judgment in the Philippines. But there is no question
that the filing of a civil complaint is an appropriate
measure for such purpose. A civil action is one by
which a party sues another for the enforcement or
protection of a right, and clearly an action to enforce a
foreign judgment is in essence a vindication of a right
prescinding either from a “conclusive judgment upon
title” or the “presumptive evidence of a right.” Absent
perhaps a statutory grant of jurisdiction to a quasi-
judicial body, the claim for enforcement of judgment
must be brought before the regular courts.
There are distinctions, nuanced but discernible,
between the cause of action arising from the
enforcement of a foreign judgment, and that arising
from the facts or allegations that occasioned the
foreign judgment. They may pertain to the same set of
facts, but there is an essential difference in the right-
duty correlatives that are sought to be vindicated. For
example, in a complaint for damages against a
tortfeasor, the cause of action emanates from the
violation of the right of the complainant through the
act or omission of the respondent. On the other
hand, in a complaint for the enforcement of a
foreign judgment awarding damages from the
same tortfeasor, for the violation of the same right
through the same manner of action, the cause of
action derives not from the tortious act but from
the foreign judgment itself.
More importantly, the matters for proof are different.
Using the above example, the complainant will have to
establish before the court the tortious act or omission
committed by the tortfeasor, who in turn is allowed to
rebut these factual allegations or prove extenuating
circumstances. Extensive litigation is thus conducted
on the facts, and from there the right to and amount of
damages are assessed. On the other hand, in an action
to enforce a foreign judgment, the matter left for
proof is the foreign judgment itself, and not the
facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues
are generally restricted to a review of jurisdiction
of the foreign court, the service of personal notice,
collusion, fraud, or mistake of fact or law. The
limitations on review [are] in consonance with a
strong and pervasive policy in all legal systems to
limit repetitive litigation on claims and
issues. Otherwise known as the policy of
preclusion, it seeks to protect party expectations
resulting from previous litigation, to safeguard
against the harassment of defendants, to insure
that the task of courts not be increased by never-
ending litigation of the same disputes, and – in a
larger sense – to promote what Lord Coke in
the Ferrer’s Case of 1599 stated to be the goal of all
law: “rest and quietness.” If every judgment of a
foreign court were reviewable on the merits, the
plaintiff would be forced back on his/her original
cause of action, rendering immaterial the
previously concluded litigation.36 (Emphases
supplied, citations omitted.)
Also relevant herein are the following
pronouncements of the Court in Minoru Fujiki v.
Marinay37:
A petition to recognize a foreign judgment declaring a
marriage void does not require relitigation under a
Philippine court of the case as if it were a new petition
for declaration of nullity of marriage. Philippine
265
courts cannot presume to know the foreign laws
under which the foreign judgment was rendered.
They cannot substitute their judgment on the
status, condition and legal capacity of the foreign
citizen who is under the jurisdiction of another
state. Thus, Philippine courts can only recognize
the foreign judgment as a fact according to the
rules of evidence.
Section 48(b), Rule 39 of the Rules of Court provides
that a foreign judgment or final order against a person
creates a “presumptive evidence of a right as between
the parties and their successors in interest by a
subsequent title.” Moreover, Section 48 of the Rules of
Court states that “the judgment or final order may be
repelled by evidence of a want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of
law or fact.” Thus, Philippine courts exercise
limited review on foreign judgments. Courts are
not allowed to delve into the merits of a foreign
judgment. Once a foreign judgment is admitted
and proven in a Philippine court, it can only be
repelled on grounds external to its merits, i.e.,
“want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or
fact.” The rule on limited review embodies the
policy of efficiency and the protection of party
expectations, as well as respecting the jurisdiction
of other states. (Emphases supplied, citations
omitted.)
As the foregoing jurisprudence had established,
recognition and enforcement of a foreign judgment or
final order requires only proof of fact of the said
judgment or final order. In an action in personam, as
in the case at bar, the foreign judgment or final order
enjoys the disputable presumption of validity. It is the
party attacking the foreign judgment or final order
that is tasked with the burden of overcoming its
presumptive validity.38 A foreign judgment or final
order may only be repelled on grounds external to its
merits, particularly, want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of
law or fact.
The fact of a foreign final order in this case is not
disputed. It was duly established by evidence
submitted to the RTC that the U.S. District Court issued
an Order on March 13, 1990 in Civil Action No. H-86-
440 ordering petitioner, AIFL, and ATHONA, to pay
respondent the sum of US$49,450.00 as sanction for
filing a frivolous suit against respondent, in violation
of Rule 11 of the U.S. Federal Rules of Civil
Procedure. The said Order became final when its
reinstatement in the Order dated December 31, 1991
of the U.S. District Court was no longer appealed by
petitioner, AIFL, and/or ATHONA.
The Order dated March 13, 1990 of the U.S. District
Court in Civil Action No. H-86-440 is presumptive
evidence of the right of respondent to demand from
petitioner the payment of US$49,450.00 even in this
jurisdiction. The next question then is whether
petitioner was able to discharge the burden of
overcoming the presumptive validity of said Order.
The Court rules in the negative.
In complete disregard of the limited review by
Philippine courts of foreign judgments or final orders,
petitioner opposes the enforcement of the Order dated
March 13, 1990 of the U.S. District Court on the very
same allegations, arguments, and evidence presented
before and considered by the U.S. District Court when
it rendered its verdict imposing the Rule 11 sanction
against petitioner. Petitioner attempts to convince the
Court that it is necessary to look into the merits of the
Order dated March 13, 1990 because the U.S. District
Court committed clear mistake of law and fact in
issuing the same. The Court, however, is not
convinced. A Philippine court will not substitute its
own interpretation of any provision of the law or rules
of procedure of another country, nor review and
pronounce its own judgment on the sufficiency of
evidence presented before a competent court of
another jurisdiction. Any purported mistake
petitioner attributes to the U.S. District Court in the
latter’s issuance of the Order dated March 13, 1990
would merely constitute an error of judgment in the
exercise of its legitimate jurisdiction, which could have
been corrected by a timely appeal before the U.S. Court
of Appeals.
Petitioner cannot insist that the RTC and the Court of
Appeals resolve the issue of whether or not petitioner,
AIFL, and ATHONA had reasonable grounds to implead
respondent as a counter-defendant in Civil Action No.
H-86-440. Although petitioner submitted such an
issue for resolution by the RTC in its Pre-Trial Brief,
the RTC did not issue any pre-trial order actually
adopting the same. In addition, petitioner was also
unable to lay the basis, whether in U.S. or Philippine
jurisdiction, for the use of the “reasonable grounds
standard” for determining a party’s liability for or
exemption from the sanctions imposed for violations
of Rule 11 of the U.S. Federal Rules of Civil
Procedure. Equally baseless is petitioner’s assertion
that the Rule 11 sanction is contrary to public policy
and in effect, puts a premium on the right to litigate. It
bears to stress that the U.S. District Court imposed the
Rule 11 sanction upon petitioner, AIFL, and ATHONA
for their frivolous counterclaims against respondent
intended to simply humiliate and embarrass
respondent; and not because petitioner, AIFL, and
ATHONA impleaded but lost to respondent.
Contrary to the claims of petitioner, both the RTC and
the Court of Appeals carefully considered the
allegations, arguments, and evidence presented by
petitioner to repel the Order dated March 13, 1990 of
the U.S. District Court in Civil Action No. H-86-
440. Worthy of reproducing herein are the following
portions of the RTC judgment:
[Petitioner’s] contention that the judgment sought to
be enforced herein is violative of its right to due
process and contrary to public policy because the
Houston Court relied upon Exhibit 91 (which is
[petitioner BPI Securities’] Exh. “1” in this case) and
the US Court disregarded the evidence on record in the
Houston Action is unavailing. Whether or not said
Exhibit 91 (petitioner’s Exh. “1”) is inadmissible or
is not entitled to any weight is a question which
should have been addressed to the US of Court of
Appeals by [petitioner]. To ask a Philippine court
to pass upon the admissibility or weight of Exh. 91
is violative of our public policy not to substitute
our judgment for that of a competent court of
another jurisdiction.
266
[Petitioner] does not deny the fact that the judgment
awarding sanctions based on [Rule 11 of the U.S.]
Federal Rules of Civil Procedure was elevated to the
United States Court of Appeals for the Fifth Circuit
which remanded the case to the District Court
precisely to give [petitioner] a reasonable opportunity
to be heard. After remand, the District Court ordered
[petitioner] to file its response to the motion of
[respondent] for sanctions and after the filing of their
respective briefs, the District Court reinstated the
former judgment.
Certainly, under these circumstances, the claim of
violation of due process cannot be sustained since
[petitioner] was given reasonable opportunity to
present its side before the imposition of sanctions.
x x x x
[Petitioner] likewise argued that the US District Court
committed a clear mistake of law or fact and in
support thereof presented Exhibits “10” to “18” to
establish that the fair market value of the Houston
property in January 1983 was no longer
US$800,000.00 by the admissions against interest of
1488 itself, of Craig who submitted the fraudulent
appraisal, and by the previous owners of the said
property and to “show that [respondent] Guevara was
either directly involved in the conspiracy against the
Houston defendants in submitting to the latter a
fraudulent appraisal of W. Craig (or was at least
responsible to the Houston defendants for the injury
that they suffered) and that the Houston defendants
had reasonable basis to implead him as a defendant in
the Houston Case on account of his participation in the
conspiracy or his fault of responsibility for the injury
suffered by them.”
However, none of these documents show that
[respondent] had any participation nor knowledge in
the execution, custody or other intervention with
respect to the said. Thus, said Exhibits “10” to “18”
are irrelevant and immaterial to the issue of the
enforceability of a foreign judgment. It must be
emphasized that the imposition of the sanctions
under [Rule 11 of the U.S.] Federal Rules of Civil
Procedure did not flow from the merits of the civil
case in the US District Court but from the lack of
even an iota of evidence against [respondent]
Guevara. To quote the US District Court:
THE COURT
x x x x
I am disturbed about that. I don’t see any evidence at
all in this case, after listening to all of this evidence, that
there ever was a lawsuit that could have been brought
against Guevara, and even after all of the discovery was
done, there was still no evidence of a conspiracy. There
is no evidence of any conspiracy to this good day that he
could have been, but there is no proof of it, and that’s
what we base these lawsuits on. That’s what the Rule
11 is designed to do, to deal with the circumstance.
So, I brought it up to Mr. Guevara because I know the
frustration, and irrespective as to whether or not he
brought it up, it would have been my position, my own
position as an officer of this Court to sanction the
defendants in this case. That is my opinion, that they
are to be sanctioned because they have brought all of
the power that they have in the Philippines to bear and
put pressure on this man so that he would have to come
over 10,000 miles to defend himself or to hire lawyers to
defend himself against a totally frivolous
claim.39 (Emphases supplied.)
As for petitioner’s contention that the Fifth Division of
the Court of Appeals, in its Decision dated December
19, 2003, copied verbatim or wholesale from
respondent’s brief, the Court refers to its ruling
in Halley v. Printwell, Inc.,40 thus:
It is noted that the petition for review merely
generally alleges that starting from its page 5, the
decision of the RTC “copied verbatim the allegations of
herein Respondents in its Memorandum before the
said court,” as if “the Memorandum was the draft of
the Decision of the Regional Trial Court of Pasig,” but
fails to specify either the portions allegedly lifted
verbatim from the memorandum, or why she regards
the decision as copied. The omission renders the
petition for review insufficient to support her
contention, considering that the mere similarity in
language or thought between Printwell’s
memorandum and the trial court’s decision did not
necessarily justify the conclusion that the RTC simply
lifted verbatim or copied from the memorandum.
It is to be observed in this connection that a trial or
appellate judge may occasionally view a party’s
memorandum or brief as worthy of due consideration
either entirely or partly. When he does so, the judge
may adopt and incorporate in his adjudication the
memorandum or the parts of it he deems suitable, and
yet not be guilty of the accusation of lifting or copying
from the memorandum. This is because of the avowed
objective of the memorandum to contribute in the
proper illumination and correct determination of the
controversy. Nor is there anything untoward in the
congruence of ideas and views about the legal issues
between himself and the party drafting the
memorandum. The frequency of similarities in
argumentation, phraseology, expression, and citation
of authorities between the decisions of the courts and
the memoranda of the parties, which may be great or
small, can be fairly attributable to the adherence by
our courts of law and the legal profession to widely
know nor universally accepted precedents set in
earlier judicial actions with identical factual milieus or
posing related judicial dilemmas. (Citations omitted.)
The Court is unmoved by petitioner’s allegations of
denial of due process because of its U.S. counsel’s
exorbitant fees and negligence. As aptly pointed out
by respondent in his Memorandum:
On the specific claim that petitioner has been denied
legal representation in the United States in view of the
exorbitant legal fees of US counsel, petitioner is now
estopped from asserting that the costs of litigation
resulted in a denial of due process because it was
petitioner which impleaded Guevara. If petitioner
cannot prosecute a case to its final stages, then it
should not have filed a counterclaim against Guevara
in the first place. Moreover, there is no showing that
petitioner could not find a less expensive
counsel. Surely, petitioner could have secured the
services of another counsel whose fees were more
“affordable.”41
267

Moreover, petitioner is bound by the negligence of its
counsel. The declarations of the Court in Gotesco
Properties, Inc. v. Moral42 is applicable to petitioner:
The general rule is that a client is bound by the acts,
even mistakes, of his counsel in the realm of
procedural technique. The basis is the tenet that an
act performed by counsel within the scope of a
“general or implied authority” is regarded as an act of
the client. While the application of this general rule
certainly depends upon the surrounding
circumstances of a given case, there are exceptions
recognized by this Court: “(1) where reckless or gross
negligence of counsel deprives the client of due
process of law; (2) when its application will result in
outright deprivation of the client’s liberty or property;
or (3) where the interests of justice so require.”
The present case does not fall under the said
exceptions. In Amil v. Court of Appeals, the Court held
that “to fall within the exceptional circumstance relied
upon x x x, it must be shown that the negligence of
counsel must be so gross that the client is deprived of
his day in court. Thus, “where a party was given the
opportunity to defend [its] interests in due course, [it]
cannot be said to have been denied due process of law,
for this opportunity to be heard is the very essence of
due process.” To properly claim gross negligence on
the part of the counsel, the petitioner must show that
the counsel was guilty of nothing short of a clear
abandonment of the client’s cause. (Citations omitted.)
Finally, it is without question that the U.S. District
Court, in its Order dated March 13, 1990 in Civil Action
No. H-86-440, ordered petitioner, AIFL, and ATHONA
to pay respondent US$49,450.00 as sanction for
violating Rule 11 of the U.S. Federal Rules of Civil
Procedure. The Court noticed that throughout its
Decision dated September 11, 2000 in Civil Case No.
92-1445, the RTC variably mentioned the amount of
Rule 11 sanction imposed by the U.S. District Court as
US$49,450.00 and US$49,500.00, the latter obviously
being a typographical error. In the dispositive portion,
though, the RTC ordered petitioner to pay respondent
US$49,500.00, which the Court hereby corrects motu
proprio to US$49,450.00 in conformity with the U.S.
District Court Order being enforced.
The Court notes that during the pendency of the
instant Petition before this Court, respondent passed
away on August 17, 2007, and is survived and
substituted by his heirs, namely: Ofelia B. Guevara,
Ma. Leticia G. Allado, Jose Edgardo B. Guevara, Jose
Emmanuel B. Guevara, and Ma. Joselina G. Gepuela.
WHEREFORE, the instant Petition is
hereby DENIED for lack of merit. The Decision dated
December 19, 2003 and Resolution dated February 9,
2005 of the Court Appeals in CA-G.R. CV No. 69348,
affirming the Decision dated September 11, 2000 of
the Regional Trial Court of Makati City, Branch 57 in
Civil Case No. 92-1445, is hereby AFFIRMED with
MODIFICATION that petitioner BPI Securities
Corporation is ordered to pay respondent Edgardo V.
Guevara the sum of US$49,450.00 or its equivalent in
Philippine Peso, with interest at six percent (6%) per
annum from the filing of the case before the trial court
on May 28, 1992 until fully paid.43
SO ORDERED.
Sereno, C.J., (Chairperson), Bersamin, Perez, and Perlas-
Bernabe, JJ., concur.
Endnotes:
1Rollo,pp. 87-103; penned by Associate Justice
Eugenio S. Labitoria with Associate Justices Mercedes
Gozo-Dadole and Rosmari D. Carandang, concurring.
2Id. at 105-112; penned by Associate Justice Marina L.
Buzon with Associate Justices Mario L. Guariña III and
Santiago Javier Ranada, concurring.
3 Id. at 113-117.
4Records (Vol. I), pp. 7-9; penned by U.S. District Judge
Kenneth M. Hoyt.
5http://www.ayala.com.ph/about_us/page/about-
ayala (Last visited on March 3, 2015)
6 Records (Vol. I), pp. 58-69.
7Rule 11. Signing of Pleadings, Motions, and Other
Papers; Sanctions.
Every pleading, motion, and other paper of a party
represented by an attorney shall be signed by at least
one attorney of record in the attorney’s individual
name, whose address shall be stated. A party who is
not represented by an attorney shall sign the party’s
pleading, motion, or other paper and state the party’s
address. Except when otherwise specifically provided
by rule or statute, pleadings need not be verified or
accompanied by affidavit. The rule in equity that the
averments of an answer under oath must be overcome
by the testimony of two witnesses or of one witness
sustained by corroborating circumstances is
abolished. The signature of an attorney or party
constitutes a certificate by the signer that the signer
has read the pleading, motion, or other paper, that to
the best of the signer’s knowledge, information, and
belief formed after reasonable inquiry it is well
grounded in fact and is warranted by existing law or a
good faith argument for the extension, modification, or
reversal of existing law, and that it is not interposed
for any improper purpose, such as to harass or to
cause unnecessary delay or needless increase in the
cost of litigation. If a pleading, motion, or other paper
is not signed, it shall be stricken unless it is signed
promptly after the omission is called to the attention
of the pleader or movant. If a pleading, motion, or
other paper is signed in violation of this rule, the court,
upon motion or upon its own initiative, shall impose
upon the person who signed it, a represented party, or
both, an appropriate sanction, which may include an
order to pay to the other party or parties the amount
of the reasonable expenses incurred because of the
filing of the pleading, motion, or other paper, including
a reasonable attorney’s fee. (Records [Vol. I], p. 636.)
8 Records (Vol. I), p. 9.
9 Id. at 268-271.
10 Id. at 271-272.
268
11 Id. at 274-275.
43Following the guidelines on interest in Eastern
12 Id. at 277-278. Shipping Lines, Inc. v. Court of Appeals (G.R. No. 97412,
July 12, 1994, 234 SCRA 78, 95-97) and Nacar v.
13 Id. at 279-288. Gallery Frames (G.R. No. 189871, August 13, 2013, 703
SCRA 439, 457-459).
14 Id. at 289-298 and 591-598.

15 Id. at 10-11.

16 Id. at 3.

17 Id. at 328.

18 Id. at 574, 651, and 665.

19 Id. at 636.

20 Id. at 578-580, 589-590, and 619-620.

21 Id. at 581-588.

22 Id. at 609-618 and 591-598.

23 Records (Vols. II-V); Exhibits 1-46.

24 Id.; Exhibits 47-51.

25 Id.; Exhibit 52.

26 Records (Vol. I), pp. 575 and 640; 679 and 714.

27Rollo, p. 117.

28 CA rollo, pp. 20-21.

29Rollo, p. 102.

30 CA rollo, pp. 180-197.

31 Id. at 250-251.

32 Id. at 260-267.

33 495 Phil. 372, 395-397 (2005).

34St. Aviation Services Co., Pte., Ltd. v. Grand

International Airways, Inc., 535 Phil. 757, 762 (2006).

35See Florenz D. Regalado, Remedial Law

Compendium, Volume II (Ninth Revised Edition), p.
524; citing Perkins v. Benguet Consolidated Mining
Co., 93 Phil. 1035 (1953).

36Mijares v. Rañada, supra note 33 at 383-386.

37 G.R. No. 196049, June 26, 2013, 700 SCRA 69, 91-92.

38Philippine Aluminum Wheels, Inc. v. Fasgi Enterprises,

Inc., 396 Phil. 893, 909-910 (2000).

39Rollo, pp. 115-117.

40G.R. No. 157549, May 30, 2011, 649 SCRA 116, 130-
131.

41 Rollo, p. 176.

42G.R. No. 176834, November 21, 2012, 686 SCRA 102,

108.

269